Raffles Place Faces Retail Space Crunch: Study

Source : The Straits Times, Nov 5, 2007

AS Singaporeans start to work longer hours, they also want to shop in areas where they work.

This demand is pushing up retail rents in Raffles Place, with occupancy nearing 100 per cent and ground-floor rents rising as much as 24 per cent in the past two years, according to a recent study by property consultants Cushman & Wakefield.

As there are no major retail space planned for the financial district, retail rents there will continue to go up by another 10 to 15 per cent in the year ahead, its managing director in Singapore, Mr Donald Han, told The Straits Times.

This is up from around 14 per cent in the last 12 months, he said.

The rise is relatively high, considering rentals in the traditional shopping belt of Orchard Road have been registering single-digit increases in the past few years.

Overall, rentals for prime retail space are expected to climb by 15 to 20 per cent year on year, with capital values up by 10 to 15 per cent, according to Knight Frank.

At the moment, Singapore's prime office space crunch is jacking up office rents and leading to an increased supply of new office developments.

'Most developers within the financial district prefer to maximise office use rather than retail,' said Mr Han.

'The irony is that when more offices are built, retail demand from the office population will grow in tandem.'

Most retail centres in Raffles Place such as OUB Centre, Raffles Xchange, One Fullerton and Republic Plaza are enjoying full occupancy.

Average gross rent for Raffles Place ground floor space is between $18 to $35 per sq ft a month, up from $13 to $25 psf a month two years ago.

Space in the basement levels are priced at between $12 to $25 psf a month, compared with $9 to $18 psf a month two years back.

In the upper floors, where there is less traffic, rents now hover between $8 to $14 psf a month, up from $6 to $9 psf a month two years ago.

As Raffles Place's retail rents rise, its landscape will also change to meet ready demand.

Read the full report in Tuesday's edition of The Straits Times.