The Straits Times | APRIL 02, 2013
Firm, hived off from HDB, to be split into its two constituent businesses
Soaring wages stemming from the labour crunch and cautious consumer spending have made it harder for retailers to cope with higher rents, said real estate consultants Colliers International.
This "tenant resistance" accounts for the marginal fall in rents of prime retail space in Orchard Road and suburban malls in Jurong East, Woodlands and Tampines, Colliers noted.
Gross monthly rents for prime ground floor space in Orchard Road fell 1.3 per cent to $36.75 per sq ft (psf) in the first quarter from the previous three months. Levels at suburban malls dipped 0.1 per cent in the same period to $33.88 psf.
Mr Calvin Yeo, the deputy managing director for client services at Colliers International, said yesterday: "Despite the cautious consumer sentiments, the leasing market continued to enjoy a consistent momentum of new openings and entrants of both shop and food and beverage outlets in the (first quarter of this year)."
He added that overall vacancy rates remained low in the three months to March 31 with many malls able to replace outgoing tenants.
On the sales front, robust demand from investors turning their attention away from residential and industrial property in the wake of new cooling measures kept the strata-titled retail market buoyant.
That was illustrated with the launch of Alexandra Central, a 99-year leasehold hotel and retail development.
Colliers noted that nearly all the 116 units were sold on the first day, with first-level space fetching more than $7,000 psf.
Colliers also reported that the average capital values for prime strata-titled retail space in Orchard Road rose by 3 per cent quarter-on-quarter to $6,806 psf.
Similarly, the average capital values in suburban malls climbed 5 per cent from the previous three months to $4,276 psf.
Ms Chia Siew Chuin, Colliers director of research and advisory, said: "Retail rents are expected to stay fairly resilient with the continued momentum of new openings and set-ups, hence keeping any downward pressure on rents to within 5 per cent.
Last week, the Urban Redevelopment Authority implemented a minimum average of 538 sq ft for all retail space.
Despite this, Ms Chia expects the capital values of prime strata-titled retail units in Orchard Road to increase by at least 5 per cent this year.
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