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The decline in rents was mainly led by the 11% year-on-year fall in rents for prime retail spaces within Orchard “as retailers continued to struggle with the lack of tourists”.
With border controls and social distancing measures still in place, Singapore saw prime retail rents drop 10.3% year-on-year to an average of $27.40 per sq ft per month (psf pm) in the third quarter of 2020, revealed a Knight Frank report.
The decline in rents was mainly led by the 11% year-on-year fall in rents for prime retail spaces within Orchard “as retailers continued to struggle with the lack of tourists”.
Average prime retail rents within the surburban region, on the other hand, had started to stabilise as it posted the least decline of 6.9% year-on-year among the various micro markets, averaging $26.60 psf pm.
“As more employees worked from home, the malls located within residential population centres were visited by many for daily necessities and household sundries,” said Knight Frank.
And while traditional retailers like Robinsons at Jem and Topshop at VivoCity has closed, there had been newcomers to the scene.
The 100-year-old Hong Kong bakery Hang Heung, for instance, opened its first Singapore outlet at Ion Orchard.
There had also been store expansions during the quarter such as Foot Locker at Orchard Gateway @ Emerald and Decathlon at The Centrepoint.
The report noted that the retail sales index, excluding motor vehicles, fell 9% year-on-year in August.
Although it marked the 19th consecutive monthly decline in the index, the drop was less severe compared to the previous months since the rollout of circuit breaker measures.
“As physical retail stores resumed operations, shopper traffic also returned to a greater extent in the suburban malls compared to the centrally-located ones that are more reliant on the tourist dollar,” said Knight Frank.
With this, it expects the rental gap between suburban malls and those in Orchard to continue to narrow, “with the former expected to recover sooner than the latter, supported by the domestic catchment resident population”.
Knight Frank believes that the increase activity within the retail sector hints at a bottoming out of rentals by end-2020 or early 2021.
“While overall retail rents are envisaged to decline by 10% to 15% for the whole of 2020 due to recessionary pressures and safe distancing restrictions still in place, rentals of retailers in the surburban regions are not expected to decline by more than 7.5% for the whole of the year,” it added.
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