Retail rents on Singapore’s prime retalstrip, Orchard Rd, slipped by 1.6 per cent in the latest quarter.
But worse is yet to come according to Colliers International in its quarterly review of Singapore retail rents, tipping a full year decline as high as five per cent.
The average monthly gross rent for Orchard Rd retail space fell to S$35.25 per sq ft in Q2 2015 from S$35.83 per sq ft in the previous quarter. That 1.6 per cent drop follows a 0.9 per cent fall in the first quarter, showing the decline is already gaining momentum.
Colliers says Orchard Rd rents are being dragged down by tougher competition from suburban malls which are drawing locals away from the heart of the city.
And an apparent oversupply of space on the fringe of Orchard Rd is unlikely to be helping either.
Complicating the picture is spirited competition for domestic and visitor spending.
In contrast, prime rents in the city state’s regional centres were steady at S$33.94 per sq ft.
“The retail property sector has continued to experience attrition, with reports on closure of shops and certain malls in Orchard Rd suffering from poor shopper traffic and pedestrian footfalls,” Colliers’ deputy MD Calvin Yeo said.
“However, given the demand for more retail variety by an increasingly more affluent consumer base, new-to-market F&B and retail operators continue to set up shops in Singapore. This has helped to shore up occupancy rates of retail malls and cushion rental falls.”
Colliers says while a five per cent decline in Orchard Rd rents is likely this year, rents in regional centres could grow by up to one per cent, based on current trends.
