Date: 31 Dec 2010
Prime retail rents in fourth quarter
Overall 4Q 2010 island wide average rentals for first level prime, good frontage spaces stabilized and
inched up to $29.24 psf. The marginal q-o-q growth of 1.1% for this quarter island wide rentals was
likely due to improved business outlook from retailers. Although retailers remain cautious in view of
rising business cost from increasing foreign worker levies and inflation, retailers’ sentiments for 4Q
2010 were generally more optimistic, as they expect higher retail sales, as compared to the previous
quarter.
Since the opening of the Marina Bay Sands, prime retail spaces in The Shoppes at Marina Bay Sands
see strong demand as retailers bank on the potential of the gaming crowd, the shoppers from the
many new residential and office spaces in the vicinity. Hence, on the whole, average prime spaces in
the Marina Bay, City Hall and Bugis area have increased to $30.21 psf. However, overall retail rents
are likely to face downward pressure in the future when additional new supply from Asia Square and
Phase 2 of Marina Bay Link Mall is completed in 2011 and 2012.
Orchard Road average retail rents in Q4 for prime spaces remained relatively flat at $41.81 psf and
$22.61 psf for Orchard Road (Central) and Orchard Road (Fringe) respectively. Overall, retail rents in
these malls are expected to stay firm due to stabilized supply in this area. However, we can expect
downward pressure on rentals for malls in the Orchard fringe area or older malls in Orchard area
arising from possible flight to newer malls from retailers. Retail space “reshuffling” may be more
prominent in 2013 when some 210,000 sq ft of retail space in the Former Hotel Phoenix, Orchard
Emerald and Specialists’ Shopping Centre is completed. On the other hand, retail rents in suburbs
continued treading upwards as the average 4Q 2010 suburban rents for prime first-storey spaces
increased 3.4% q-o-q to $31.12.
* Based on pre-defined portfolio of properties; refers to prime specialty shop space on ground level with good frontage and of up
to 1,500 sq ft
Market Outlook
While 2010 is a period of economy recovery with high GDP growth and better employment prospect,
island wide average retail rentals for both prime spaces and non-prime spaces has yet to recover to
the record high in 2008. A full recovery to the 2008 level may be unlikely, given the increasing
concerns on rising business costs and market’s adjustments to the additional retail spaces released in
Central Area in 2009/2010. Nonetheless, following general positive sentiments, we can still expect y-oy
growth in 2011 island wide average retail rents for non-prime spaces to tread upwards marginally up
to some 1%. Island wide average retail rentals for prime, good frontage spaces are to increase at a
greater rate of up to 3%.
With pockets of non-prime spaces in Orchard Road still available in the market, average retail rents for
these non-prime spaces are expected to stay flat.
On the other hand, Orchard Road prime spaces,
which are better sought-after and mostly occupied, are likely to mirror the island wide prime spaces
rental growth of up to 3%. We note that there is potential for more rentals upside in this area if more
could be done to tapAverage suburban retail rentals for prime spaces are also expected to increase marginally at some 2%– 3%, following improved consumer confidence, stronger employment and greater propensity to spend, notwithstanding new supply from malls, such as Clementi Mall and Former Katong Mall, which are slated to open next year. on the exuberance visitor arrivals and to encourage greater tourist dollars and
retail sales. As compared to the high y-o-y growth of 24% in tourist receipt per visitor estimated this
year, shopping expenditure per tourist is projected to increase at a slower rate of some 16% to 20%
Spurring more tourist dollars in the retail industry is increasingly vital in view of the greater competition
among retailers arising from the many new malls.
Average suburban retail rentals for prime spaces are also expected to increase marginally at some
2%– 3%, following improved consumer confidence, stronger employment and greater propensity to
spend, notwithstanding new supply from malls, such as Clementi Mall and Former Katong Mall, which
are slated to open next year.
For further information, please contact:
Png Poh Soon, Associate Director, Head of Consultancy & Research,
Knight Frank Pte Ltd (65) 6228-7393
Joanna Chen, Analyst, Consultancy & Research,
Knight Frank Pte Ltd (65) 6228-6857
Ends
Notes to Editors
Knight Frank LLP is the leading independent global property consultancy. Headquartered in London,
Knight Frank and its New York-based global partner, Newmark Knight Frank, operate from 207 offices,
in 43 countries, across six continents. More than 6,340 professionals handle in excess of US$886
billion (£594 billion) worth of commercial, agricultural and residential real estate annually, advising
clients ranging from individual owners and buyers to major developers, investors and corporate