Singapore retail rents ‘stabilising’
Singapore retail rents are “exhibiting signs of stabilisation,” according to a quarterly review by property company Edmund Tie & Co.
Gross rents of first storey retail space in the Orchard Road/Scotts Road strip remained flat at $37.20 per sqft per month in the first quarter of this year. During the same period last year, rents in the same area fell 1 per cent.
“The rents in Orchard/Scotts Road remained resilient, supported by limited supply,” concluded Edmund Tie.
The fall in first storey retail rents at the other city areas, which include Raffles Place, City Hall, Tanjong Pagar, Shenton Way and Bugis also moderated to 0.6 per cent quarter-on-quarter in the first quarter of this year compared with a 1 per cent decline during the same period last year.
Edmund Tse says the stabilisation of rents came on the back of higher visitor arrivals and stronger retail sales in 2016. According to preliminary estimates from the Singapore Tourism Board in February, tourist arrivals grew by 7.7 per cent to 16.4 million and tourism receipts rose by 13.9 per cent to $24.8 billion. Retail occupancy across the island also improved towards the end of 2016, reaching 91.5 per cent in the fourth quarter of 2016, up from 91.9 per cent in the fourth quarter of 2015.
Rents for first storey retail space at suburban malls also maintained at $30.60 per sqft per month quarter-on-quarter.
“Besides embracing omni-channel marketing and the use of loyalty cards, suburban malls are relying more on their food & beverage tenants to support their revenue. Not only are F&B outlets less adversely affected by the growth of e-commerce, they can also improve the shoppers’ experience.
“Additionally, labour constraints faced by the F&B retailers are ameliorated with the use of automation and mobile devices to take orders. As more people uses food delivery services such as Uber Eats, Deliveroo, Foodpanda, the F&B retailers are able to overcome their space constraints and widen their customers’ catchment at the same time.
“Moving forward, we anticipate retail rents to remain under pressure from the external environment and continued growth of e-commerce. More Singapore residents are also shopping on online platforms where they enjoy shopping round the clock globally and seek better bargains.”
Dr Lee Nai Jia, head research (SEA), added that e-commerce is an enabler that allows the products of local retailers to reach to a wider audience, without paying the high rents at prime shopping malls.
“It also lowers the costs of failure, and allows for greater flexibility as it does not require sales personnel or a physical place to exhibit their goods.”