Retail Rents: S'pore Keeps 4th Spot In Asia

Source : The Straits Times, Nov 20, 2008

SINGAPORE is still the fourth most expensive centre for retail rents in Asia, though its global ranking has slid a couple of notches given faster rises elsewhere, a new survey has found.

The Republic fell to 16th position globally from 14th last year, according to the survey by consultancy Cushman & Wakefield.

Rents in Orchard Road, Singapore's premier shopping belt, rose 9.3 per cent in the year ended June 30 from $42 per sq ft per month to $45.90.

But because of US dollar movements, that is reflected in the survey as a 25 per cent jump from US$325 psf per year to US$405.

CB Richard Ellis put out a similar report yesterday, which placed Singapore in 22nd spot in the world's fastest growing destinations for retail rents.

The market today, however, is changing fast in the light of the global financial crisis. Singapore is seeing lower tourist arrivals. Retail sales, excluding motor vehicles, have started to dip.

A number of factors will determine the rate of rental changes for the rest of the year and next year, said Ms Letty Lee, director of retail services at CBRE.

'The full impact of the financial meltdown on the job market is still unknown. Meanwhile, consumers will remain cautious and may cut spending as a result,' she said. 'The financial turmoil will also impact tourism arrivals, which will affect consumer spending. Landlords may be pressured to reduce rentals as a result.'

Still, Cushman & Wakefield's managing director Donald Han believes that Orchard Road prime rents will be flat next year despite new supply as it is still the first stop for new brands here.

But suburban malls will see a softening of rents, he said.

'While the weakening economic environment has started to pass through to retail rentals towards the fourth quarter, we believe that the rentals would remain well supported in the medium term by the comparatively undershopped characteristic of the Singapore market,' said the Cushman & Wakefield report.