Orchard Road Shop Rents Should Stabilise: Savills

FF Fashion

Sep 2, 2011
CommercialGuru.com.sg

Orchard Road rents will likely stabilise this year, although limited supply and steady demand indicate a preference for prime space, according to Savills’ latest retail report.

The real estate services provider noted that suburban rents are expected to hold, even with the influx of new supply, as long as malls are strategically located, with space easier to lease, given the more flexible trade mix.

The report added that around seven million sq ft of future supply was in the pipeline by the end of Q2 this year. Moreover, 1.1 million sq ft of retail space will be coming up in the second half, from major projects such as Scotts Square and 112 Katong.

In comparison, 38,000 sq ft of retail space was completed in the second quarter, while the vacancy rate fell from 6.1 percent in Q1 to 5.8 percent in Q2, according to the Urban Redevelopment Authority (URA). URA’s rental index for central areas moderately climbed by 0.7 percent in Q2, with average base rents for Orchard Road’s good-quality space staying firm at S$34.4 per sq ft per month for the quarter, although prime ground floor retail space could bring higher rates.

“The mood has turned cautious as burgeoning debt in the US and the downgrade of its credit rating for the first time in history sent global stock markets spiralling. The employment outlook has also toned down a little,” said Savills.

“Tourist arrivals, however, are likely to hold strong this year with the upcoming Formula 1 Grand Prix as well as the debut of H&M and Abercrombie & Fitch on Orchard Road.”

Approximately 3.2 million tourists visited Singapore in Q2, 14 percent more than in same period last year.