Bookmark & Share
Despite robust leasing activity, prime retail rents in Singapore for Q3 2014 were held back by a slide in tourist arrivals and lacklustre retail sales, according to Colliers International.
Between January and July, tourist arrivals in the city-state marginally decreased by 2.5 percent to 8.9 million compared to the same period last year, mainly because of a 29.4 percent drop in Chinese visitors.
“The downward trend of Chinese visitors has placed a notable drag on retail sales, to the point of affecting retail sales during the Great Singapore Sale (GSS). Excluding motor vehicles, retail sales have recorded negative a year-on-year growth since April 2014,” said the property consultancy. Specifically, it fell by two percent in that month, 0.8 percent in May, three percent by June and 1.3 percent in July.
As a result, the average monthly gross rent of prime retail space in Orchard Road receded by 0.5 percent to S$36.25 per sq ft in Q3 2014 from S$36.42 per sq ft in the previous quarter.
In contrast, rents of prime retail space in the regional centres slightly increased by 0.3 percent to S$33.72 per sq ft compared to S$33.61 per sq ft previously.
Given the dependency of Orchard Road malls on tourist dollars, versus the steady flow of local resident shoppers into regional centres, the former’s rental premium over the latter declined to 7.5 percent during the third quarter from 8.4 percent in Q2 2014.
Meanwhile, despite the drop in tourist arrivals and lacklustre retail sales, leasing activity in Singapore remained healthy in the third quarter thanks to the appearance of new brands and expansion of existing retailers.
In July, Japanese retail brand Muji opened a concept store at Changi Airport Terminal 2 and its flagship outlet at VivoCity, while Tokyu Hands Inc unveiled a 7,500 sq ft store at Westgate in September. American sportswear brand Under Armour also opened its second and third stand-alone stores here at Collyer Quay and Tampines in August
Moving forward, retail rents are forecasted to remain stable due to Singapore’s appeal to global retailers, added Colliers International.
However, rents of prime ground floor retail space in Orchard Road could remain unchanged or post a tiny drop of one percent for the entire year due to weak tourist arrivals, while rents in the Regional Centres could grow by one or two percent.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
Related Articles:
New eateries banned from 18 areas: URA