Retail property market remains stable in Q2: DTZ

Source : Business Times - 3 Jul 2008

Turnover rents rise; limited growth for fixed gross rents

BUOYED by positive consumer sentiment and the Great Singapore Sale period, the retail property market remained stable in the second quarter of this year, according to a market report by real estate consultancy DTZ.

Turnover rents in Q2 rose, but there was limited growth for fixed gross rents. DTZ noted that tenants were ‘resisting committing at higher rents for both new retail space and lease renewals’.

First-storey monthly fixed gross rents remained largely unchanged quarter on quarter, hovering at an average of $42.40 per square foot (psf) for prime areas such as Orchard/Scotts Road, $33.70 psf in suburban areas and $27.10 psf in other city areas.

The retail market is expected to remain stable, despite competition from additional supply that will come on stream over the next few years. Malls such as ION Orchard, Orchard Central and 313 @ Somerset are slated for completion by 2009.

As much as 5.4 million square feet of retail space will be added to the mix between the second half of this year and 2012. Marina Bay Shoppes by developer Marina Bay Sands will account for the biggest chunk of that space, with 15 per cent or 800,000 sq ft, closely followed by CapitaLand and Sun Hung Kai Properties’ ION Orchard at 663,000 sq ft.

The suburban retail scene will also be bolstered by upcoming developments, mainly in the west and north-west regions, such as the Big Box project at Jurong Regional Centre and the Civic Cultural and Retail Complex at Vista Xchange. Fifty per cent of the potential supply in suburban areas is in the west.

DTZ’s retail associate director Anna Lee says: ‘The increase in future supply will put a cap on price and rental increases, while offering opportunities for the retail market to reinvent itself with new concepts and offerings.’

Singapore’s retail sales for April - excluding vehicles - rose 7.7 per cent year on year. But total retail sales value dipped about 4 per cent to $2.77 billion, from March’s $2.89 billion, with almost all sectors reporting less activity in April.