Prime retail rents in Singapore to surge, forecasts say

Dec 26, 2006, 2:43 GMT

Singapore - The surge in Singapore's prime retail rents is expected to continue until 2009, after rising this year by 4 per cent to 5.3 per cent, property consultants said Tuesday.

Supply remains tight, with additional space from new shopping centres and extensions to existing malls quickly taken up.

Retail sales are forecast to climb next year with the improving economy, analysts said.

CB Richard Ellis (CBRE) said that its prime-rental index for the city-state is expected to be up by 4.3 per cent in 2006, the biggest increase in five years.

Retail rents are expected to grow at an even faster clip, with hardly any new supply of space until 2009, when major developments are scheduled for completion.

Rental increases next year are likely to outstrip the rate of hikes in 2006, with analysts' estimates for 2007 ranging from 4 to 8 per cent.

'For the whole of 2007, supported by the Singapore Tourism Board's positive outlook, rental growth should remain in the region of 4 to 4.5 per cent,' Chua Yang Liang, Jones Lang LaSalle's (JLL's) head of research, told The Business Times.

Macquarie Research anticipates rental hikes of 5 to 8 per cent a year until 2009.

Growth is expected to slow when retail space opens in Singapore's first two casino resorts at Marina Bay and the island of Sentosa.

The 3.6-billion-US-dollar project awarded to the Las Vegas Sands is scheduled for completion in 2009, followed a year later by the 3.3-billion-US-dollar resort to be built by Malaysia's Genting International and Star Cruises.

The two resorts will add about 1.3 million square feet of retail space.

'New malls will have to continually differentiate themselves from the herd,' Chua was quoted as saying.

New trends include an increasing preference by mall owners for smaller outfits and more international brands making their way to Singapore.