Singapore retail rents slipped 1.3 per cent in the last quarter of 2016, compared with the previous quarter.
According to data from JLL Singapore, included in a pan-industry market review, retail rents were under most pressure in the Marina quarter where most of the new space coming onto the market in the quarter was concentrated.
Despite positive net absorption of the opening of South Beach (60,000 s ft) and Tanjong Pagar Centre (100,000 sqft), rental corrections in the Marina submarket remained underpinned by the weak performance of retailers, with many of them seeking pre-termination of their leases, reports JLL.
The average vacancy rate of suburban malls, including Reit-owned and strata-titled shopping centres, has more than doubled from less than 1 per cent in 2013 to 2.4 per cent in the fourth quarter of last year. Year-on-year, average monthly gross rents for prime retail space in suburban malls fell by 7.1 per cent in the quarter.
Prime retail rents in Orchard Road have fallen 7.5 per cent over the same period.
The quarter saw marginal year-on-year retail sales decline in October, (excluding motor vehicles), driven by poorer sales in computers and telecommunications equipment and watches and jewellery, “ indicating the persistence of weak consumer sentiment”. And despite take-ups being dominated by the entry of new F&B operators, the F&B sales index also recorded a similar year-on-year decline.
“Total retail investment sales value for the fourth quarter rose sharply from a quarter ago, driven by the interest in retail assets in the suburban submarket, likely due to the resilient rental income they provided,” reported JLL. “Jurong Point, one of the biggest suburban shopping centres, was put up for sale at a price of more than SG$2 billion and received considerable interest.
“However, apart from the marginal compression of yields in the suburban submarket, overall yields remained relatively stable as the rate of capital value correction was in line with rental decline across the Orchard and Marina submarkets.”