PRIME Orchard Road rents fell 3 per cent quarter-on-quarter to $32.90 per square foot per month (psf pm) in Q3 2009, a new report from CB Richard Ellis (CBRE) shows.
This is in line with the 2.9 per cent quarter-on-quarter fall in prime Orchard Road rents seen in Q2.
However, in a reversal of the rental trend, prime suburban rents inched up 0.7 per cent quarter-on-quarter to average $28.50 psf pm in Q3 2009, driven by competition for limited availability. In view of this, CBRE now expects prime suburban rents to contract by 1-2 per cent this year, compared with its earlier estimate of a 2-3 per cent contraction.
By contrast, CBRE is maintaining its forecast for a 10-12 per cent decline in prime Orchard Road rents for the whole of this year. Including a further decline of not more than 5 per cent expected for next year, the eventual rental trough for prime Orchard Road retail space should not be less than the $30 psf pm-level, the firm said.
'The last time Prime Orchard Road rents fell below $30 psf pm was from 1998 to mid-2000, when the effects of the Asian Financial Crisis were most felt,' noted the property firm in its report. 'Since the turn of the millennium, prime Orchard Road rents have shown a certain resilience. Even during the global electronics downturn and Sars in 2002/2003, these rents did not dip below $31.50 psf pm.'
CBRE also noted that with the close of the third quarter, leasing activities for the new Orchard Road space have somewhat stabilised and most tenancies have been committed.
Mandarin Gallery is almost 100 per cent occupied ahead of its pre-Christmas opening. Knightsbridge announced that it is 50 per cent pre- committed and expects the remaining leases to be finalised by Q3 2009. TripleOne Somerset is 60 per cent pre-let, while, across the street, 313@Somerset announced that it is 90 per cent leased ahead of its late-November opening.
Two other major Orchard Road malls, Ion Orchard and Orchard Central, are already open for business - although both of them were not fully leased yet as of the last updates provided.
Come 2010, the two upcoming integrated resorts will offer visitors and locals another two brand new and distinct shopping destinations, said Letty Lee, CBRE's director of retail services.
'A line-up of old and new international brands along with local offerings and emerging labels is widely expected,' she said. 'The developments will reach out to a more cosmopolitan clientele, and is likely to offer a different shopping experience from what we have encountered locally so far. It is an exciting time for the retail scene.'
Source: Business Times, 15 Sep 2009
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