Magazines Archives - 2009 April

Retail rent in S’pore to fall further
Story 6 - Property Update

... As a result of government-mandated rebate. but some Property developers polled are keeping mum on how much of the rebate would actually find its way to the rental.

RETAIL tenants in Singapore can expect rent rates to go down following the government’s move to give commercial property developers a 40% rebate.

Property developers polled by Retail Asia said that they would be passing on the government-mandated rebate to tenants, although not all of them were ready to unveil how much of the rebate would actually find its way to the rental.

Last January, the Singapore Ministry of Finance unveiled a S$20.5-billion (US$13.6-billion) Resilience Package in the 2009 budget, which is said to help primarily businesses survive the economic downturn. Part of that budget included a 40% property tax rebate to commercial and industrial property owners in Singapore.

CapitaLand Ltd, Singapore’s largest property developer, was among the first to announce that it would pass down the full amount of the rebate to its tenants. This translates to about S$41.5 million, or an average rebate of 4% on net rentals, to all existing tenants in its retail, commercial and industrial developments.

Shortly after Capitaland’s announcement, AsiaMalls Management Pte Ltd revealed that it was also planning to pass on the full amount of the rebate.

“We will be granting the full amount of 40% property tax rebate to all our tenants,” a spokesperson for the group told Retail Asia last February.

In addition, the landowners intend to work closely with their tenants “who are facing difficulties in their business”, to improve sales through specific and focused mall promotions.

“During the current economic crisis, we have geared our mall promotions such that they are directly tied to shopper spending,” AsiaMalls’ spokesperson continued.

“We intend to support tenants by purchasing their vouchers and products for promotion giveaways. For instance, in the case of Liang Court, we have [done just that], over the past seven months (especially in the run-up to the grand re-launch of the mall) including Christmas 2008. The mall has purchased tenants’ vouchers and products equivalent to S$92,000 [and] this goes back [directly] to the tenants as sales [they’ve] chalked up,” she elaborated.

In addition, the mall owner said that it was reviewing various options to further assist retailers, although they were not able to comment on the details at this point.

Another mall owner, Frasers Centrepoint Malls, also told Retail Asia that it would be “passing on the benefits of the property tax rebate” to their tenants, along with “helping [them] with aggressive promotional activities”.

Wendy Low, Frasers Centrepoint’s general manager, added that to boost traffic to its malls, the property developer has put together promotions, beginning last month, and reward shoppers with shopping vouchers.

“To value-add to the dining experience and present an opportunity for the family to chill out at Robertson Walk, we [rolled] out our ‘Robertson Rocks’ promotion on March 15 [offering], in addition to the variety of F&B choices, an all-day Sunday flea market, fashion shows and entertainment from some very talented young performers. This will be a quarterly event,” she continued.

Mapletree Investments, the owner of the 1.5 million-sqf VivoCity, the largest mall in the city-state, would also be passing on the rebates. The company told Retail Asia that it was “mindful of the need to do our best for our tenants during these difficult times”.

“Wherever possible, we will pass on the benefits of the Resilience Package to our tenants. We are currently finalising the details,” a spokesperson for the group said.

Property services firm Colliers International noted in its January 2009 Knowledge Report that the unfavourable operating environment has been pushing down retail rent rates in the city-state this year.

Pointing out that retail tenants have become more selective and rental-sensitive, Colliers said that retailers are taking longer to commit to leases.

“Coupled with the ample pipeline supply of retail space in the market, average gross rents for prime retail space on Orchard Road eased by 1.7% quarteron- quarter to an average of S$33.63psf per month (in the fourth-quarter of 2008 versus the third-quarter of the same year),” Colliers stated.

It added that taking into consideration the recessionary pressures, the rise in unemployment, the wage adjustments and the additional retail stock of three million sqf, “prime retail rents are expected to face downward pressure during the year”.

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