Retail real estate sluggish: DTZ

SINGAPORE

Average prime rental rates along Orchard Road and Scotts Road remained unchanged in the third quarter, the firm said.

For the third straight quarter, gross rents of prime first-storey space in the area stayed at $39.70 per square foot per month.

Rents in other areas in the city continued to decline. Prime first storey rents in these areas fell by 0.8 per cent to $24.10 per square foot per month.

Monthly gross rents of prime first-storey retail space in the suburban malls, meanwhile, were unchanged at $33.60 per square foot per month.

DTZ said the new supply of retail space last year led to a competitive environment, which did not support any increase in rentals.

Some 1.3 million sq ft of new retail space became available last year.

Other than the newly-completed and pipeline supply that have put a lid on rentals, the two new integrated resorts also had an impact, DTZ said.

The integrated resorts siphoned off some demand for shopping as more people spend time and money at the casinos instead of at the malls, it noted.

But with a robust economic recovery taking place, DTZ said retail rents should increase gradually next year as the new supply is eventually absorbed.— Singapore’s retail real estate continues to be dogged by supply pressure, according to property consultancy DTZ.