Singapore's Retail Scene Heats Up
 

25 October 2011
CommercialGuru.com.sg


The retail scene in Singapore is witnessing an increase of big-format stores this year and rents do not come cheap for some of them.

Forever 21 recently launched its 22,000 sq ft flagship store in Orchard Exchange, while H&M made its Singapore debut with its 33,000 sq ft store at Orchard Building.

In December, Abercrombie & Fitch (A&F) will open its first Singapore store in Knightsbridge, which will have a built-up area of 21,000 sq ft.

According to Savills, retail space per capita has dropped from eight sq ft to seven sq ft over the past 10 years, without taking into account the rise in visitor arrivals.

While retail stock has expanded at a compound rate of 0.9 percent in the past 10 years, the population in Singapore has grown at a corresponding rate of 2.3 percent.

In July 2011, visitor arrivals in Singapore reached 1.3 million, the highest number ever achieved for a single month.

“The threat of an economic slowdown is expected to put a lid on rental growth in the short term. However, Singapore’s rising population and robust tourist arrivals will continue to underpin retail sales, with suburban malls benefiting particularly from the population growth,” said Sulian Tan, Senior Director of Retail & Lifestyle.

Meanwhile, prime rents on Orchard Road moved up by two percent to S$35.1 psf per month in the third quarter, while prime suburban rents grew marginally by one percent to S$30.5 psf per month.

Going forward, rents on Orchard Road are expected to remain firm, with retail sales continuing its rise ahead of the year-end festive season.

“However, the rental gap between Orchard Road and suburban malls is anticipated to narrow again on the back of deteriorating economic conditions, with some retailers expected to consolidate their operations amid stiffer competition,” said Tan.