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Average monthly gross rents of prime retail space in Orchard Road slipped by 0.2 percent to S$36.17 per sq ft in Q4 2014 compared to the previous quarter, according to the latest report from Colliers International.
In contrast, monthly gross rents of such premises in the regional centres inched up by 0.3 percent to S$33.83 per sq ft on a quarterly basis.
In 2014, average monthly gross rents of prime retail space in Orchard Road dipped by 0.8 percent, while that in the regional centres rose by 1.1 percent. As a result, the rental gap between these two locations shrank to 6.9 percent at the end of 2014 from 9 percent in the previous year.
“The rental trends in 2014 indicated that retail activities have gained greater prominence in residential town centres islandwide, and are no longer as heavily concentrated in Orchard Road,” said Colliers International’s Deputy Managing Director Calvin Yeo.
In terms of sales, only 453 caveats were lodged for strata-titled retail units for the entire year, a far cry from the 1,163 caveats filed in 2013. According to Colliers, this shows that the Total Debt Servicing Ratio (TDSR) framework has affected the transaction of retail properties.
Despite the lower sales volume, average prices were unchanged at S$6,942 per sq ft for strata-titled prime retail space in Orchard Road, likewise for such premises in the regional centres at S$4,491 per sq ft.
Moving forward, the growth of retail rents are expected to be flat for 2015 as retailers are resisting higher rents amidst a challenging business environment, said Chia Siew Chuin, the consultancy’s Director of Research & Advisory
“With approximately 1.2 million sq ft of retail space expected to be completed in 2015, the overall islandwide demand for retail space will continue to be supply-led.”
“While newly-emerging non-mall retail options in varied and diverse locations might be characterised by moderate rent increases, those in traditional malls are likely to continue to experience fairly stable rents in the year ahead,” she added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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