Re­tail rents bot­tom out as gyms, ar­cades move in

The rental de­cline nar­rowed to 1% in 2018 from the 4.7% and 8.3% de­creases in 2017 and 2016, re­spec­tively.

Singapore Business Review - - CONTENTS -

The re­tail rental mar­ket in Sin­ga­pore has shown signs of bet­ter days as recorded in the lat­ter days of 2018. Based on the Ur­ban Re­de­vel­op­ment Au­thor­ity’s (URA) data, over­all Cen­tral Re­gion re­tail rents showed a mar­ginal uptick of about 1.2% QOQ for Q4 2018.

This means H2 was flat com­pared to H1 2018, and rents fell by just 1% for the full year 2018. The rate of de­cline slowed down con­sid­er­ably from the 4.7% and 8.3% de­clines for 2017 and 2016, re­spec­tively. Con­sid­er­ing this pro­gres­sion, will this be the sig­nal the bot­tom­ing of the long-run­ning de­cline that Sin­ga­pore has wit­nessed start­ing in Q1 2015?

Ac­cord­ing to Col­liers In­ter­na­tional, Or­chard Road ground-floor rents in the Lion City saw an uptick of 1.4% YOY to SGD41.20 (USD30.18) psf pm in H2 2018, whilst re­gional centres saw a mar­ginal uptick of 0.4% YOY to $33.60 (US$24.62) psf pm, mark­ing re­cov­ery in ground-floor rents.

“We ex­pect ground-floor rents to lead the grad­ual re­cov­ery, but over­all re­tail rents should con­tinue flat­ten­ing out in 2019-2020 be­fore pick­ing up sus­tain­ably on more favourable

sup­ply-de­mand dy­nam­ics,” Col­liers In­ter­na­tional said in their re­port. “We advise land­lords to be flex­i­ble and prac­ti­cal about set­ting rents in or­der to sup­port oc­cu­pancy.”

What’s new in re­tail?

Tenant pro­file mixes were head­ing to­wards more big-for­mat ac­tiv­i­ty­based re­tail concepts, such as game ar­cades, bil­liard rooms and gyms, tak­ing up an­chor ten­an­cies in malls. More on­line re­tail­ers also went phys­i­cal, such as Taobao which opened its first phys­i­cal store in Sin­ga­pore in No­madx at Plaza Sin­ga­pura. On­line gro­cer hon­est­bee opened habi­tat, billed as “the world’s first tech-en­abled gro­cery and din­ing con­cept”. Mean­while, lux­ury brands con­tin­ued to em­brace du­plexes, or dual-level shops. Ital­ian life­style brand Mon­cler opened a flag­ship du­plex at The Shoppes, its largest APAC store.

Global lux­ury brands con­tinue to em­brace the con­cept of du­plexes, or dual-level shops, and ex­pan­sion into chil­dren’s wear. Ma­rina Bay Sands Shoppes now hosts 17 du­plexes - the largest col­lec­tion of du­plexes un­der one roof in Sin­ga­pore. In Jan­uary 2019, Ital­ian ap­parel man­u­fac­turer and life­style brand Mon­cler opened a flag­ship du­plex at The Shoppes, its largest store in the Asia-pa­cific re­gion.

Re­tail stock will in­crease by 2.36 mil­lion sqft over 2018-2019 due to sev­eral large projects, in par­tic­u­lar Jewel Changi Air­port (~576,000 sqft), Paya Le­bar Quar­ter (PLQ)

Mall (~340,000 sqft) and Fu­nan Mall re­de­vel­op­ment (~325,000 sqft). The sup­ply in 2019 is 90.4% more than the an­nual net sup­ply of 1mil­lion sqft in 2018, ac­cord­ing to a re­port from Sav­ills Re­search, although this should ease to less than 500,000 sqft per an­num from 2020 to 2023. By 2020, the main re­tail sup­ply will come from aux­il­iary re­tail com­po­nents in res­i­den­tial de­vel­op­ments.

From Col­liers: Sin­ga­pore re­tail and in­dus­trial prop­erty sec­tors find their foot­ing; rosier out­look for se­lected seg­ments in 2019

Over­all re­tail rents should con­tinue flat­ten­ing out in 2019-2020 be­fore pick­ing up sus­tain­ably on more favourable sup­ply-de­mand dy­nam­ics.

Or­chard Road will be re­vi­talised as a life­style des­ti­na­tion

Sin­ga­pore re­tail sup­ply, ab­sorp­tion, & va­cancy (2011-2022)

Newspapers in English

Newspapers from Singapore

© PressReader. All rights reserved.