Big Apple shops pay big rent

Singapore has moved up one spot to become the 17th most expensive retail location in the world.

According to the latest CB Richard Ellis (CBRE) Global MarketView report on the retail sector, prime retail rents in Singapore stood at US$436 ($619) per square foot per annum in the first quarter of this year.

It said prime retail rents in the world’s leading shopping destinations have stabilised in most markets in the first quarter.

The report said as the global economic recovery begins to gather momentum, consumer and retailer confidence have started to improve.

While this has still not translated into retail sales growth in most markets, demand for prime retail space remains healthy and vacancy in the best locations is low, it added.

As a result, there are a number of major cities where prime rents are rising, and many more where the rate of decline has slowed or rents are now stable.

New York City remained the world’s most expensive retail destination, with prime rents at US$1,725 psf/annum. Sydney was in second place globally at US$1,155 psf/annum, while Hong Kong ranked third at US$974 psf/annum.

London remained in fourth place, after recording a 20-per-cent annual increase in rents since the first quarter of last year to US$861 psf/annum.

Paris rounded out the top five locations with rents of US$791 psf/annum.

Tokyo stayed in seventh position globally, with rents of US$711 psf/annum, while Brisbane moved up one place from the fourth quarter of last year to rank eighth at US$668 psf/annum, and Melbourne remained in 10th place at US$568 psf/annum.

The report said the Asian region is helping to lead the recovery, with retail markets generally stabilising or strengthening in the first quarter.

It added that with the exception of Japan, retail leasing activity in major Asian cities continued to pick up and a number of international retailers are looking to expand their footprint across the region, particularly in Singapore, Hong Kong, Beijing and Shanghai.

Ms Letty Lee, CBRE’s director of retail services in Singapore, said: “The retail landscape changed dramatically over the past year. Singapore has been successful in attracting a sizeable number of global brands and new-to-market concepts due to an abundant choice of prime pipeline supply in the Orchard Road and the Marina Bay area. That in turn has put some pressure on prime retail rents.”

However, CBRE said there is a risk of supply imbalance in markets like China and India, where a large amount of shopping centre construction will be delivered over the next nine months.

Source : Today – 26 May 2010

Any of these land parcels may be exchanged for pieces of land of equivalent value in Marina South and Ophir-Rochor.

This spells good news for private developers, as more choice land parcels in the prime districts may be up for grabs.

Last week, the Ministry of National Development (MND) withdrew a white site at Ophir-Rochor that was previously made available for sale via the Reserve List in October 2008.

MND had said in its news release that this Ophir-Rochor land parcel will be removed from the Government Land Sales (GLS) programme as “the development plan for the site is being reviewed”.

Both the Urban Redevelopment Authority and Singapore’s Ministry of Foreign Affairs declined to provide MediaCorp with details of the site area and exact locations of the land parcels involved.

Mr Nicholas Mak, real-estate lecturer at Ngee Ann Polytechnic, said that due to the high valuation of the land parcels, which may run into hundreds of million or more, he reckons both Singapore and Malaysia may hire more than one valuer each to conduct respective valuation of the land parcels.

Valuation fees alone may run upwards of a few hundred thousand dollars, due to the sheer size of the land parcels, Mr Mak added.

Mr Colin Tan, head of research and consultancy at Chesterton Suntec International, predicts that it is very likely that M-S will swap its current land parcel in Tanjong Pagar for same-value land parcels in Marina South or Ophir-Rochor.

“Both Marina South and Ophir-Rochor sites are more well-developed in terms of facilities and amenities available, as compared to the current site which holds the Tanjong Pagar railway station,” said Mr Tan.

He added that Marina South has the upcoming Marina Bay Financial Centre, while Ophir-Rochor has a certain buzz and historical heritage because of its location near Arab street and Sultan Mosque, which has attracted several backpackers’ hostels to set up there.

Source : Today – 26 May 2010