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With more retail tenants closing their shops in Singapore, especially on the iconic shopping belt of Orchard Road, it seems that the city-state is unlikely to reclaim its status as a shoppers’ haven anytime soon. This is amid several attributing factors casting a shadow to the market.
Citing data from the government, Bloomberg News reported that the vacancy rates of prime retail space in Orchard Road have risen to its highest level since 2011, while that for the entire country reached a seven-year high.
It also reported that some major retailers are also exiting the republic this year—including French menswear chain Celio and British brand New Look, while Al-Futtaim Group plans to close at least 10 stores.
Another reason why retailers are downsizing their premises or closing shops is that tourists are spending less, given the soft economic growth of Singapore’s neighbours, especially China.
Local shoppers are also scrimping. In fact, consumer prices declined for the 17th straight month in March, representing the longest downtrend on record, as buyers feel the impact of the sluggish economy. Colliers International forecasts that if the economic challenges persist and consumers continue to reduce their discretionary spending, given the higher risk of pay cuts and job losses, rents of prime retail space in Singapore could slide by up to 5 percent.
Meanwhile, Cushman & Wakefield said upcoming supply of nearly 4 million sq ft over the next three years is also projected to bring down rents and could lead to more vacancies.
The report also said retailers are facing stiffer competition from e-commerce as Singaporeans are among the most tech-savvy shoppers in Asia, citing that the proportion consumers here who buy merchandise from the web surpasses those in Hong Kong and Malaysia.
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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