SINGAPORE - Rents for prime space in Orchard Road held steady in the second quarter as a flurry of new retailers sought to establish their presence in the popular shopping belt.
During the period, Italian watch brand Vabene opened its maiden boutique at Mandarin Gallery.
Likewise, Hong Kong's i.t multi-brand boutique has set up shop at the newly renovated Wisma Atria.
These retailers helped bolster monthly rentals for the shopping district's prime space at $35.10 per sq ft (psf) in the second quarter, according to property research and consultancy firm Savills on Thursday.
"Prime space on Orchard Road will continue to be highly sought-after as South-east Asia becomes the go-to destination for international retailers," said Savills Research senior director Alan Cheong.
Given the strong interest, the retail space crunch along Orchard Road is unlikely to ease any time soon. The only supply coming onstream this year in the district is the orchardgateway mall, expected to have 172,000 sq ft of net lettable area. But about 90 per cent has already been pre-let before it opens by the end of the year.
"Together with the limited supply, we expect prime rents on Orchard Road to remain firm," he said.
In the suburbs, monthly rentals also remained firm at $31.10 psf in the second quarter, due to robust demand from big-name tenants, food and beverage operators, beauty and wellness operators and fashion retailers, according to Savills.
Challenger, Kinokuniya, Marks & Spencer and Robinsons opened new outlets at Jem in Jurong East last month.
In contrast to that in Orchard Road, the suburbs will have more retail space in the pipeline. Two malls, Westgate and Bedok Mall, are set to open by the end of the year, adding about 636,000 sq ft of net lettable area.
But this incoming supply could lead to lower returns as the retail mix is likely to be dominated by F&B and anchor tenants, noted Mr Cheong.
This is because anchor tenants, such as departmental stores, pay lower rents on a psf basis, but take up more lettable area.
In contrast, speciality stores like fashion retailers take up smaller spaces and pay higher rents. But suburban rents are likely to remain steady for the rest of the year, added Mr Cheong.
"We do not expect a material adjustment in suburban rents at this juncture as the local economic fundamentals are still strong."
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