Although investment activity has risen, retail spending remains weak
PROPERTY consultancy DTZ expects retail rents to drift ‘with minimal declines’ for the rest of the year and in 2010.
The firm’s head of South-east Asia research Chua Chor Hoon said: ‘Although investment activity has risen, retail spending remains weak and depends on the extent of economic recovery.’
More retail space has been coming onstream in Singapore as the economy struggles to pick up. Around 486,000 square feet of space – mainly in City Square Mall, Kitchener Road – was completed in the third quarter of this year. And more than 500,000 sq ft could be available in Q4.
The total amount of retail space completed this year will be around 2.6 million sq ft – a historic high, said DTZ.
But the situation is not altogether bleak. ‘Although retailers remain cautious about expansion, leasing activity is selectively active,’ said DTZ’s associate director of retail, Anna Lee. ‘F&B retailers have been more active in leasing enquiries, as consumers are more willing to spend on food than on fashion apparel.’
DTZ also found that the number of shop transactions in the first two months of Q3 surpassed those in Q2 and was close to the number in Q2 2008 – before the financial crisis.
In Q3, prime first-storey rents in Orchard Road and Scotts Road dropped only marginally as new malls drew both new and existing brands, raising take-up rates. From $39.50 per sq ft per month (psf pm) in Q2, rents eased just 0.5 per cent to $39.30 psf pm over a quarter.
Capital values in the area have remained unchanged for two consecutive quarters.
Prime first-storey rents in suburban areas were steady at $33 psf pm in Q3, the same as in the previous quarter. Capital values in these areas also rose one to 3 per cent.
According to DTZ, suburban malls continue to enjoy healthy levels of occupancy and there is still a queue of eager tenants. Some of these retailers are moving from areas that have smaller residential catchments.
Source : Business Times – 6 Oct 2009
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