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CBRE predicts a significant drop in retail space supply. For this year, supply pipeline may drop to 280,000 sq ft from 1.06 million sq ft in 2019.
With the COVID-19 outbreak deterring shoppers from frequenting restaurants and malls, CBRE Research anticipates prime floor rents of retail properties to decline.
Gaps in mall and floor rents of secondary and prime retail properties are also expected to widen further, reported The New Paper.
The real estate consultancy noted that the temporary ban on travellers from China “will likely take a toll on sales of luxury retail, given an expected drop in tourist arrivals”.
Earlier last month, the Singapore Tourism Board forecasted a decline of up to 30% in tourist arrivals.
Chinese nationals are the city-state’s biggest source of tourists, accounted for around 20% of Singapore’s international visitor arrivals last year.
Considering the sector’s grim situation, CBRE predicts a significant drop in retail space supply. For this year, supply pipeline may drop to 280,000 sq ft from 1.06 million sq ft in 2019.
Prime rents are expected to fall by up to 2% from $25.05 per sq ft (psf) per month last year.
Landlords will experience growing pressure to maintain occupancy and rents for their portfolio, especially for malls owned by institutional investors.
“While the economic outlook is challenging, the government stimulus packages may help to mitigate any immediate impact,” said Desmond Sim, Head of Research for Singapore and South-east Asia at CBRE.
Leasing demand within the office market could drop in traditional sectors of insurance, finance and technology industries. The agile space sector may also reduce take-up.
With this, more small- to mid-sized transactions of below 30,000 sq ft are expected to emerge in the near term.
Vacancy level would likely increase in the next few years, as 1.89 million sq ft of island-wide office supply are set for completion this year.
A subdued supply pipeline for logistics property, however, may boost occupancy as the market is given time to absorb leftover supply from the previous years.
Nonetheless, vacancy is still expected to hover around 12% given that majority of the vacant stock are older buildings with lower specifications.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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