But profitability's in question with retail sales slowing.
The approaching festive season brought little cheer as the market battled sluggish economic growth and continued appreciation of the Singapore dollar.
Retail sales (excluding motor vehicles) recorded a positive growth of 1.3% YoY in October. Savills however notes that since April, growth has decelerated to between -0.6% and 4.1% YoY, while sales of watches and jewellery, an indicator of discretionary spending, contracted for the sixth consecutive month in October.
Here's more from Savills:
The Monetary Authority of Singapore (MAS) announced in October that it will allow the Singapore dollar to appreciate at its existing pace to combat inflation. Economists had earlier predicted that the MAS would ease its monetary stance to encourage spending and spur economic growth.
According to preliminary estimates, the Singapore economy grew by a mere 0.3% YoY in Q3 but shrank 5.9% quarter-on-quarter (QoQ).
Meanwhile, the contraction in the manufacturing sector for the fifth consecutive month in November raised fresh fears of a technical recession.
Retailers cautious on expansion plans
Retailers were generally cautious on their store expansion plans in the second half of this year, with some planning to consolidate their businesses. However, new entrants and existing retailers who increased their footprint were offered attractive rents in good locations.
Most store expansions involved internationally renowned brands such as H&M, Isetan, Lowrys Farm, Sephora, Toys ”R”Us and Uniqlo, largely targeting the mass market. H&M, for example, has opened its second store in ION Orchard and will have its third one in Jem in Jurong East. Toys ”R”Us and Babies ”R”Us opened two adjoining stores in City Square Mall with a combined area of 25,000 sq ft. This is the maiden foray into Southeast Asia for Babies ”R”Us.
The brands’ big-store formats i well in the current economic climate, contributing significantly to the commitment levels at new malls as well as drawing other tenants to the projects. Orchardgateway is more than 65% leased while Westgate in Jurong East is more than 50% pre-committed ahead of their target opening in the second half of next year.
US furniture store Crate & Barrel has taken up the entire 20,000 sq ft of space at orchardgateway @ Emerald.
Over in Jurong East, Isetan will have its first supermarket outside Orchard Road in Westgate.
Together with a department store, Isetan will occupy some 59,700 sq ft of space spanning three storeys. Westgate will also house Fitness First Platinum, Food Republic, My First Skool childcare, children’s fitness centre My Gym and music school Yamaha.
Meanwhile, Jem benefitted from early premarketing activities, having pre-leased more than 90% of its space less than one year before its target opening.
Two malls – Plaza Singapura’s new wing and Chinatown Point – welcomed shoppers in November, in time for the year-end festivities. Formerly The Atrium@Orchard, the new wing brings the total NLA of Plaza Singapura from 498,150 sq ft to 629,000 sq ft.
Major tenants in the new wing include new-to-market players such as buffet restaurant 1 Market (11,000 sq ft) and multi-label Japanese store JRunway (3,600 sq ft), as well as leading retailers GAP, Lowrys Farm, Uniqlo and Sephora.
November also saw the reopening of Chinatown Point, following a year of renovation, with a total retail GFA of 311,725 sq ft. Targeting the PMEBs (professionals, managers, executives and businesspeople), the mall has been carpeted and houses over 200 shops such as Cortina Watch, Eat at Taipei, Rays Hair Salon, Samsung, Sunglass Hut and The Coffee Bean & Tea Leaf.
North and South Grandstands, a 350,000-sq ft lifestyle destination on the site of the former Singapore Turf Club in Bukit Timah, is now around 80% occupied. Monthly rents were said to range from S$9 to S$12 per sq ft on the ground l oor and S$4 to S$6 per sq ft on upper floors. Master tenant Cogent Land Capital designated 30% of the space to retail and services, 30% to F&B, 30% to children’s enrichment centres and 10% for sports activities.
Among the project’s anchor tenants are Hansang Korean Kitchen & Market (13,000 sq ft), PasarBella (30,000 sq ft), Ristorante Da Valentino (10,000 sq ft) and TungLok-Xihe Peking Duck (15,000 sq ft). Separately, the asset enhancement of ION Orchard culminated with the opening of H&M’s second store and Crate & Barrel’s inaugural store in Asia.
Average monthly prime rents on Orchard Road inched down to S$35.1 per sq ft in Q4 from S$35.2 per sq ft in Q3. Rents for units on street level held i rm, but those on the second storey weakened. Landlords were also more receptive to big-format stores, although their rents could be in the low teens, even in prime locations.
Prime suburban rents remained firm at S$31.1 per sq ft per month.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)
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