Food and beverage has overtaken fashion as the primary driver of demand for retail real estate in Singapore.
In its Third Quarter Retail Index covering Asia-Pacific, property company Jones Lang LaSalle says that despite declining retail sales and consumer spending, the prime retail sector remained in good shape during the third quarter.
“Notwithstanding the overall challenging retail environment, Singapore’s most popular prime shopping destinations continued to demonstrate resilient performance, with malls such as Ngee Ann City, Paragon and Ion Orchard maintaining full occupancy,” the report concluded.
“F&B has overtaken fashion retailers as the top demand driver.”
Orchard Rd is ranked fifth most expensive in Asia for High Street net face rents with a figure of US$4106 per square metre per annum. That’s a fraction of the $19,476 of top placed Russell St in Hong Kong, and behind Shanghai’s West Nanjing Rd at $5473.
But on a quarterly basis, the average shopping centre rent in Orchard Rd and District 9 fell by 0.4 per cent quarter on quarter, and by 0.7 per cent year on year. It was the only city of 18 measured by JLL to record a reduction, despite the highly publicised downturn in Hong Kong retail rents. (This is largely due to that comparison measuring shopping centre rental rates which have to date remained relatively unaffected in Hong Kong’s turmoil).
JLL predicts “further rental correction” in Singapore amid subdued occupier demand “as labour market challenges and weak consumer sentiment prevail in the near term”.
The report said that despite leasing support from new market entrants into the city, expansion of existing retailers has slowed and some have cut back their store networks.