SINGAPORE - Rents in Orchard have fallen while those in regional centres remain relatively unchanged, according to Colliers International's latest research and forecast report on the retail property sector.
The average monthly gross rent for ground floor shop space at Orchard Road dropped another 1.2 per cent in the fourth quarter of 2015 to $34.40 per square foot, compared to the third quarter.
But "the easing rents in Orchard Road could provide opportunities for retailers looking to enter this submarket" according to Anthea To, Senior Associate Director for research advisory at Colliers.
Rents in regional centres such as Woodlands and Tampines remained relatively unchanged for the third consecutive quarter at $33.94 per square foot.
In 2015, prime retail rents in Orchard Road were down by 4.9 per cent, while those in regional centres were up by 0.3 per cent from 2014.
"Orchard Road's prime retail rents are expected to remain under pressure and could ease by up to 5 per cent this year," added Ms To. This is due to high dependency on tourist traffic and strong competition from malls in other areas.
Despite demand for prime retail space continuing to be driven by overseas retailers, the retail market continues to show signs of slowing.
Orchard Road registered the steepest fall in rents among the retail submarkets in the fourth quarter of 2015, as it entered its seventh consecutive quarter of decline.
This was despite the sustained recovery in visitor numbers.
According to the Singapore Tourism Board (STB), visitor arrivals grew 3.6 per cent in October and 4.3 per cent in November compared to 2014, to 1.25 million and 1.19 million respectively.
"For regional centres supported by a ready residential population, prime retail rents are expected to stay relatively unchanged," said Ms To.
With Orchard Road's rents falling and those in regional centres holding constant, the rental premium that prime space in Orchard Road commands over prime space in regional centres narrowed further to 1.4 percent in the fourth quarter of 2015, from 2.6 per cent in the previous quarter and 14.9 per cent in 2010.