Singapore retail rents flatten in Q2, prices fall 1.2%: URA
Quarter on quarter, islandwide vacancy rate for sector is down by 0.1 percentage point to 6.6%
RENTS of retail space in Singapore’s central region remained unchanged in the second quarter of 2024, after a 0.4 per cent decline in Q1 2024.
The uncertain economic outlook, which led landlords to compromise on rents and prioritise occupancy rates, likely capped price growth and resulted in rents remaining stable in the second quarter, said Angelia Phua, JLL’s consulting director of research and consultancy.
Islandwide, the retail vacancy rate tracked by the Urban Redevelopment Authority fell marginally by 0.1 percentage point to 6.6 per cent in Q2, compared with Q1, data released on Friday (Jul 26) showed.
In Q2, the amount of occupied retail space rose by 46,000 square metres (sq m) net, a significantly larger increase than the 8,000 sq m net increase in Q1.
Retailers, especially those in the food and beverage sector, expanded strategically in the Outside Central Region (OCR).
Phua noted that doughnut chain Mister Donut expanded its presence with the opening of two outlets at Jurong Point and Northpoint City. Meanwhile, Yang Guo Fu Mala Tang opened a new outlet in Tampines Mall.
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“The opening of Pasir Ris Mall in June 2024 with a healthy pre-commitment rate further attests to the healthy occupier demand for retail space,” she added.
All sub-markets experienced positive net absorption in Q2, except for the Orchard area which saw no net absorption, said CBRE’s head of research for South-east Asia Tricia Song.
She added: “The OCR and RCR (Rest of Central Region) sub-markets outperformed in the quarter, posting positive net absorption of about 237,000 square feet (sq ft) and about 65,000 sq ft, respectively. “The strong take-up of space in these sub-markets could be attributed to the completion of major projects Pasir Ris Mall and New Bahru in Q2.”
Retail stock increased by 43,000 sq m net in Q2, compared with an increase of 19,000 sq m in the previous quarter.
As at end-Q2, there was a total supply of about 580,000 sq m gross floor area (GFA) of retail space in the pipeline, down from the 610,000 sq m GFA of retail space in the pipeline in Q1.
Cushman & Wakefield head of research Wong Xian Yang expects only about 9 per cent of new retail supply between H2 2024 and 2028 to come from the Orchard area.
He noted that the retail component of the renovated Grand Hyatt Singapore and The Cathay’s redevelopment are set to be completed this year, while the redevelopment of Faber House into a hotel with a retail component is expected to finish in 2026.
Meanwhile, prices of retail space fell by 1.2 per cent in Q2, reversing from the 1.8 per cent increase in Q1.
JLL’s Phua said: “The elevated interest rate environment that raises funding costs has led to investors’ cautionary stance, which likely accounted for the soft retail property prices in the quarter.”
She added: “With market liquidity and a scarcity of tradable quality retail assets, rising rents should extend the price growth of prime floor space in quality retail assets.”
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