Magazines Archives - 2010 January

Exciting times ahead for Singapore’s retail property sector
Story 12 - Property Update

Singapore’s retail property sector can expect “exciting times” in the year ahead, according to real estate services group CB Richard Ellis (CBRE), with the scheduled opening of the two Integrated Resorts (IRs), more subterranean retail space at Marina Square, Raffles City, Marina Bay and at the various Circle Line stations, in addition to more suburban malls in Clementi and Bedok. “With the addition of 2.5 million sqf of retail space, we are also likely to see more new brand entrants in 2010,” said CBRE.

Letty Lee, CBRE’s director, Retail Services, noted: “Looking ahead, we expect prime Orchard Road rents to dip between 5% and 10% in 2010 as businesses and trading patterns in Orchard Road adjust to the completion of the new/refurbished malls. In the course of the next 12-18 months, rents should
then stabilise. But prime suburban rents are likely to remain stable, underpinned by catchment demand.”

Singapore’s retail market had experienced a year of change in 2009. Despite the gloomy financial climate, several new malls opened in the first three quarters of the year, adding some 1.7 million sqf
of retail space to the market.

About 39% of these new spaces were in Orchard Road, with new or revamped centres making their debut fast on the heels of the completion of the Singapore Tourism Board’s S$40-million makeover
of Orchard Road. The final quarter of 2009 saw the opening of more malls along Orchard Road, namely Mandarin Gallery, 313@somerset and TripleOne Somerset.

The year also saw the arrival of several suburban and city fringe developments, including Tampines 1, Yew Tee Point, City Square Mall and Iluma, bringing many new-to-market labels to the heartlands.

On the whole, the retail market saw some minor rental correction in the quarter. Prime Orchard Road rents averaged S$32.40 (US$23.20) psf down 1.5%quarter-on-quarter and -10.2% year-on-year, much less than initially anticipated, according to CBRE. Prime rents were S$36.10 psf a year ago. Similarly,
prime suburban rents dipped to S$28.10 psf/month in the fourth quarter of 2009, reflecting a marginal decrease of 1.4% quarter-on-quarter and 3.1% year-on-year.

Said Lee: “Notwithstanding the 2.3 million sqf completed [last year], the year-on-year decline in retail ents was much smaller than expected, reinforcing the point that demand for retail space is supply-led.”

The new malls injected a slew of new brands and shopping concepts which provided a greater variety of products, F&B and lifestyle choices to shoppers.

uxury labels took advantage of the abundant choice locations available to expand their network aggressively. This included taking up prime space for their second- and third-line brands. Similarly,
High Street fashion also took the opportunity to take up street-front locations along Orchard Road, observed Lee.

Many landlords in the new shopping centres tailored their tenant mix to include more F&B outlets. This resulted in a proliferation of Japanese food halls, quick-service kiosks and upmarket food courts, noted CBRE in its end-of-year update on Singapore’s retail property sector.

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