RENTS for retail space would have risen by as much as 9 per cent by the year-end despite new properties coming on the market, says Knight Frank.
Booming retail sales are behind the recent increases in rents, particularly in the Orchard Road area, the property consultancy said in a report yesterday.
Average monthly rentals of prime shop space in Orchard Road malls have reached $38.80 per sq ft (psf), up 1.8 per cent from about three months ago.
Average prime rent in the Marina Centre, City Hall and Bugis area rose 2.5 per cent to $27.80 psf over the same period.
Malls including VivoCity in HarbourFront Centre and the extension at Velocity@Novena Square on the city fringes registered the highest rise of 5.9 per cent to $21.90 psf for the third quarter.
One sign of the recent rental boom can be seen in the new wing of Centrepoint Shopping Centre, developed by Frasers Centrepoint.
More than 90 per cent of space in the wing has been leased with rents reaching a high of just over $70 psf compared with a high of $50 psf in the old wing.
Indeed, rents for prime space in the wing are now at $45 psf to $70 psf, compared with $45 psf to $55 psf in July when the building was 50 per cent leased.
Retailer Robinson, is the anchor tenant, taking up the top three floors. Restaurant chain Crystal Jade will not be taking up the top floor as planned.
The general manager of investment properties of Frasers Centrepoint, Mr Tong Kok Wing, said rents at the old wing have also risen, though he did not give the actual numbers.
'This is reflective of the strong market demand and demonstrates our existing and new tenants' confidence in Centrepoint especially given its extension and refurbishment,' he said. New space in prime malls is clearly in short supply, said Knight Frank, even though more is coming onstream.
VivoCity, Singapore's largest mall opened on Saturday and there are new shops coming up at Square 2, The Central, the extension to Velocity@Novena Square and Icon Village at the Icon condominium.
The retail market will see more competition as new malls in Orchard Road come up.
It is likely to continue to attract more foreign retailers, particularly those which are interested in using Singapore to expand regionally, said another consultancy DTZ Debenham Tie Leung in an earlier report.
In the third quarter, when no new malls were completed, average occupancy of malls remained high at more than 90 per cent.
Knight Frank also forecast that overall capital values of retail space could go up by 4 per cent to 8 per cent.
It said the wave of collective-sale fever in residential property has begun to spread to the retail sector.
The owners of Ming Arcade in Cuscaden Road and Upper Serangoon Shopping Centre located near Upper Serangoon Road are preparing for such a sale.
But there is unlikely to be a large number of collective sales of retail malls with strata titles, said Knight Frank.
Not only is the number of such malls limited, it is also difficult to get the individual shop owners to agree to a sale.
