3 New Malls,5 Million Sq Ft

Source : TODAY, Wednesday, July 9, 2008

Will landlords face a possible over-supply?

SHOPAHOLICS can look forward to a fresh injection of 5 million sq ft of new retail space by the end of next year, according to Knight Frank’s calculations.

By then, at least three big new malls are projected to be ready to welcome shoppers: West Coast Plaza, Illuma and ION Orchard.

However, while customers rejoice over larger and more novel malls, will retailers and landlords face a possible over-supply?

Probably not, says Mr Nicholas Mak, director of research and consultancy at Knight Frank, despite up to 60 per cent of this new supply being in the centre of the city.

“Pent-up demand for retail space in the area, brought about by government initiatives to boost tourism, such as the inaugural Formula One night race, is likely to absorb most of the on-coming supply,” said Mr Mak.

It has been more than a decade since a new mall has appeared in the premier Orchard Road shopping area.CapitaLand and Sun Hung Kai Properties’ ION Orchard will provide 663,000 sq ft of prime retail space on Orchard Turn. Work is also underway on the nearby 313@Somerset. Both should help rejuvenate the area.

Compared to Hong Kong, Mr Mak believes Singapore, :based on its current population, has room to expand its retail stock further.

Tourism figures have been robust, with 10.3 million visitors and $13 billion spent last year. And despite global economic woes, 4.26 million visitors came to Singapore in the first five months of this year, up 4.3 per cent year-on-year.

“With a fast-rising population, coupled with strong visitor arrivals, growth in retail space is imperative to sustain the quality of the shopping experience,” said Mr Mak.

Nominal retail sales are anticipated to rise from $650.60 per sq ft (psf) last year to almost $700 psf in 2010, according to Knight Frank.

“Therefore, this potential new supply in the retail sector will be positive news for both retailers and consumers,” saidMr Mak. “Retailers can look forward to choice shop space and higher retail sales psf, while consumers can expect a more exciting retail scene coming their way.”

In Bugis, six-storey Illuma shopping mall is almost completed, with Jack Investments billing it as an “urban entertainment centre”.

West Coast Plaza is slated to open before the end of this year and is being billed as “An Oasis in the West” by developer Far East Organisation. This follows the revamp and renaming of the 16-year-old Ginza Plaza.

Beyond next year, the largest retail development currently planned is Marina Bay Shoppes by Marina Bay Sands. This is part of the integrated resort project and will provide 800,000 sq ft of waterside shopping space.

CB Richard Ellis estimates a total6.9 million sq ft of retail space will come on stream by 2012, albeit mostly next year.