SINGAPORE - Rents for prime shops in Orchard Road remained firm in the first quarter this year but they could soften in the near future, property consultancy Savills said in a report on Wednesday.
Prime retail space rent in the area was unchanged at $34.60 per sq ft (psf) per month on average in January through March from the previous three months, it said.
However, the consultancy added that Orchard Road prime shop rents may "face difficulties in the near future".
This is because inflation and a manpower crunch will "further increase the already high business costs in the prime shopping area", making it tougher for shops to keep afloat.
New tourism laws in China, a major source of tourists to Singapore, have also slashed the number of visitors from China to Singapore and may spell more difficulties ahead for the retail sector here, Savills added.
Still, it said that retail space on Orchard Road remained in "healthy demand" and suitable space for new retailers may continue to be limited.
"Orchard Road remains the focal point for new brands as well as names looking for stronger branding," the consultancy said.
It noted that although the vacancy rate in the area rose from 4.5 per cent in the fourth quarter last year to 7.8 per cent in the first quarter this year, that number does not take into account Orchard Gateway's precommitted leases.
Factoring in those leases, the vacant stock for Orchard Road would have been less than 452,000 sq ft in the first quarter, just slightly higher than the past three years' quarterly average of 424,000 sq ft, Savills said.
Several major malls are expected to be completed this year islandwide. These include the Kallang Wave mall at the Sports Hub, Capitol Piazza in the central business district, the Big Box mall in Jurong East and The Seletar Mall in Sengkang.