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ION Orchard to open its doors to public on Tuesday

Posted on 20 Jul 2009 | Comments Off

ION Orchard will open its doors on Tuesday in its soft launch, with over 70 per cent of the shops ready for business.

It is the second major mall to open along the prime Orchard Road shopping strip in a decade, with 96% of its space leased.

After two and a half years, and more than S$2 billion in investment and construction costs, the eight-storey mall with a retail mix of established brands, flagship stores and new-to-market shops is ready for business.

In order to incentivise the tenants to open by Tuesday, the developers gave them a 30 per cent rental rebate until end-October. And for those who could not open by Tuesday, they received a smaller tiered rebate.

But can the new mall put the sparkle back into Singapore’s lacklustre retail scene?

Latest figures showed that May retail sales rose marginally by 0.8 per cent compared to April, after two consecutive month-on-month declines. The mall’s developer, Orchard Turn Developments, is bullish about prospects.

Soon Su Lin, chief executive, Orchard Turn Developments, said: “The property market is cyclical. We believe this is a long term investment for us and the tenants have full confidence that the market will turn around. We have an unmatched location on top of the MRT station, stunning architectural design and the tenant mix is very interesting.”

Another thing it is banking on is the 200,000 daily footfall along Orchard Road. But with more than 20 per cent of Singapore’s retail space concentrated along this prime shopping belt, competition will be tough.

When asked if it will offer more help to tenants, the developer said it will keep a close eye on the bottomline.

Soon said: “We believe in the relationship as a partnership and we will monitor their sales and we’ll work with them. Under our contract, our rental structure is such that we are paid a base rental or a percentage of turnover, whichever is higher.”

ION will officially open in October, when it aims to have more than 90 per cent of shops open.

Meanwhile, Orchard Residences, which is part of the development, is 84 per cent sold and should be ready by the middle of 2010.

Source : Channel News Asia – 20 Jul 2009

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Smaller drop in prime Orchard Road rents expected

Posted on 14 Jul 2009 | Comments Off

PRIME Orchard Road rents are tipped to fall about 10 per cent to 12 per cent this year, and not up to 20 per cent as forecast earlier, said CB Richard Ellis (CBRE).

The consultancy pointed to the healthy demand for existing shop space and the high pre-commitment levels seen at yet-to-be completed malls.

Mandarin Gallery, for instance, is 93 per cent pre-committed.

Prime Orchard Road rents fell 6 per cent in the first half of this year and now average $33.90 per sq ft (psf).

CBRE painted a gloomy picture of the retail market in March, saying it was looking at a 15 per cent to 20 per cent fall in Orchard Road prime rents this year.

It cited a weakening economy, a shift away from luxury goods and falling visitor arrivals. Many retailers were then crying out for rent cuts.

Major retailer RSH Group recently said that it is still renewing shop rents at higher levels even though its profits have fallen. At some locations, it may have to downsize its stores.

But CBRE has since become more upbeat. The retail landscape along Orchard Road is about to hot up with plush new malls – which are said to be signing leases at rents lower than last year’s – nearing completion.

Orchard Central has ’soft-opened’ while Ion Orchard, Mandarin Gallery and 313@Somerset look ready to open in the next six months.

And existing malls on Orchard Road are trying to keep up with the new arrivals.

The Heeren has announced revamp plans, while Ngee Ann City is sprucing up the former Sparks space into a chic lifestyle cluster catering to young adults, said CBRE.

Suburban malls are doing far better. Rents fell just 2.4 per cent in the first half.

Prime suburban rents remained unchanged at $28.30 psf a month on average in the second quarter. Support came from the limited upcoming suburban supply, said CBRE.

Suburban malls owned by real estate investment trusts are under pressure to be yield-accretive and are therefore less likely to drop rents drastically, said CBRE.

The consultancy has also moderated its forecasts for suburban mall rents, saying they are likely to contract by 5 per cent to 6 per cent this year, down from an earlier estimate of a 10 per cent to 15 per cent decline.

Source : Straits Times – 14 Jul 2009