SINGAPORE has moved up a notch in property firm CB Richard Ellis' latest survey of the most expensive retail markets. Prime retail rents here were the 18th most expensive in the world in the third quarter of this year, up from 19th spot in Q2.
Orchard Central: One of the new malls completed in Singapore's prime shopping belt this year
New York, Hong Kong and Paris retained the top three positions.
Sydney overtook London as the fourth most expensive place to rent prime shop space, although this was due chiefly to the strengthening of the Australian dollar relative to the US dollar.
As a result of tougher trading conditions, gaps are appearing in some high streets and shopping centres as retailers consolidate networks or cease trading altogether, CBRE says in its latest Global MarketView on the retail sector. 'There is increasing differentiation between 'the best and the rest'.
The retail sector in the Asia-Pacific region is recovering faster and better than expected, as government programmes and strong economic growth in some markets help restore consumer confidence.
Hong Kong still ranks as the world's second most expensive retail rental market, with values of US$976 per square foot per annum.
'Prime retail rents vary significantly across the different Asian markets, but in Q3, retail rents in most cities either declined at a slower rate, stabilised or showed a slight up-tick,' CBRE says.
'However, the threat of supply-side risk remains significant in certain cities in mainland China, Singapore and India, where large amounts of shopping mall construction are expected to be delivered in the coming years.'
Knight Frank managing director and Singapore retail property veteran Danny Yeo noted that over the past six months, average rents for prime retail space in suburban malls have been more resilient, still managing to post low single-digit per cent increases as supply remains tight. Along Orchard Road, however, the opening of four new malls this year has put pressure on rentals.
'There's a window of opportunity, which is still open, for retailers to secure space at good rentals in the Orchard Road vicinity,' said Mr Yeo.
According to Knight Frank data, the stock of shop space in the Orchard Road area increased about 17 per cent in the first nine months of this year compared with end-2008 figures.
CBRE says New York's reign as the world's most expensive retail market continued in Q3 despite a 25 per cent drop in rental rates over the past 12 months. Prime New York retail rents ended Q3 at US$1,640 psf per annum.
The prime retail rents quoted by CBRE represent the typical 'achievable' open market headline rent that an international retail chain would be expected to pay for a ground-floor retail unit (either high street or shopping centre, depending on the market) of up to 200 sq metres (2,153 sq ft) of the highest quality and specifications and in the best location in a given market.
Source: Business Times, 1 Dec 2009
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