Singapore has moved up one spot to become the 17th most expensive retail location in the world.
According to the latest CB Richard Ellis (CBRE) Global MarketView report on the retail sector, prime retail rents in Singapore stood at US$436 per square foot (psf) per annum in the first quarter of this year.
It said prime retail rents in the world’s leading shopping destinations have stabilised in most markets in the first quarter.
The report said as the global economic recovery begins to gather momentum, consumer and retailer confidence have started to improve.
While this has still not translated into retail sales growth in most markets, demand for prime retail space remains healthy and vacancy in the best locations is low, it added.
As a result, there are a number of major cities where prime rents are rising, and many more where the rate of decline has slowed or rents are now stable.
New York City remained the world’s most expensive retail destination, with prime rents at US$1,725 psf/annum. Sydney was in second place globally at US$1,155 psf/annum, while Hong Kong ranked third at US$974 psf/annum.
London remained in fourth place, after recording a 20 per cent annual increase in rents since the first quarter of 2009 to US$861 psf/annum. Paris rounded out the top five locations with rents of US$791 psf/annum.
Tokyo stayed in seventh position globally, with rents of US$711 psf/annum, while Brisbane moved up one place from the fourth quarter of 2009 to rank eighth at US$668 psf/annum, and Melbourne remained in 10th place at US$568 psf/annum.
CBRE said the Australian economy is growing strongly, with an expanding workforce and falling unemployment. However, higher interest rates have fuelled consumer caution and prevented any significant increase in retail sales.
The report said the Asian region is helping to lead the recovery, with retail markets generally stabilising or strengthening in the first quarter.
It added that with the exception of Japan, retail leasing activity in major Asian cities continued to pick up and a number of international retailers are looking to expand their footprint across the region, particularly in Singapore, Hong Kong, Beijing and Shanghai.
Letty Lee, director, Retail Services in Singapore, CBRE, said: “The retail landscape changed dramatically over the past year. Singapore has been successful in attracting a sizeable number of global brands and new-to-market concepts due to an abundant choice of prime pipeline supply in the Orchard Road and the Marina Bay area. That in turn has put some pressure on prime retail rents.”
However, CBRE said there is a risk of supply imbalance in markets like China and India, where a large amount of shopping centre construction will be delivered over the next nine months.
As for Latin American markets, some cities like Mexico City and Santiago have seen the strongest growth in rents, showing 12 to 13 per cent on-year growth in rentals.
Source: Channel News Asia, 25 May 2010