Office rents in Singapore’s central business district eased 1.2 per cent to S$8.90 (Bt220) per square foot a month in the first quarter of this year, while retail rents show signs of stabilising despite challenges, a property consultancy says.
Research by Edmund Tie & Co shows the decline in CBD office rents last quarter abated from the 2.1 per cent drop in the fourth quarter of last year.
While the uncertain external environment continued to pressure rents, higher pre-commitment levels at upcoming completions and the filling up of newer buildings helped support rent levels.
Office rents in Marina Bay eased 0.5 per cent in the first quarter of this year, less than the 2 per cent seen in the fourth quarter of last year.
This was supported by the higher occupancy rate of 96.8 per cent in the first quarter of this year compared with the 94.6 per cent in the fourth quarter of last year.
Shadow space in Marina Bay, as of the first quarter of this year, declined from nearly 150,000 square feet (14,000 square metres) to 45,650 square feet. “While the market showed signs of stabilising, it is premature to conclude the office market is bottoming out due to the uncertain external environment.
“Geopolitics in the region remain volatile, although the summit talks between US President Donald Trump and Chinese President Xi Jinping went well,” said Lee Nai Jia, head of research.
Retail rents are exhibiting signs of stabilisation, with gross rents of first-storey retail space in Orchard Road and Scotts Road staying flat at S$37.20 per sq ft per month in the first quarter of 2017. This was in contrast to the corresponding period of last year, when rents declined by 1 per cent
Rents in Orchard Road and Scotts Road remained resilient, supported by limited supply. The fall in first-storey retail rents in other city areas, including Raffles Place, City Hall, Tanjong Pagar, Shenton Way and Bugis, also moderated – to 0.6 per cent quarter on quarter in the first quarter.
In the fourth quarter of last year, the quarterly decline was 1 per cent.
The stabilisation of rents comes on the back of higher visitor arrivals and stronger retail sales last year.
According to preliminary estimates from the Singapore Tourism Board in February, arrivals grew by 7.7 per cent to 16.4 million and tourism receipts by 13.9 per cent to S$24.8 billion.
Retail occupancy across the island also improved towards the end of 2016, reaching 91.5 per cent in the fourth quarter from 90.6 per cent in the third quarter.
“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,” Lee said.
More Singapore residents are drawn to cities like Bangkok and those in Taiwan, Malaysia and South Korea for shopping.
Lee cited Bangkok’s Chatuchak market as being a popular destination for Singapore shoppers.