SINGAPORE (THE BUSINESS TIMES) - Rents of retail space in Singapore's central region rose 0.6 per cent in the fourth quarter of 2021 after falling 2.7 per cent in the previous three months, according to figures from the Urban Redevelopment Authority (URA) released on Friday (Jan 28).

However, for 2021 as a whole, rents were still down 6.8 per cent, albeit narrowing from the 14.7 per cent drop seen in 2020.

URA's data also showed that prices of retail space in the central region increased 1.9 per cent in the fourth quarter of 2021, after remaining flat in the third quarter. For 2021, prices of retail space fell 4.2 per cent, easing from a decline of 4.5 per cent in 2020.

Cushman & Wakefield's head of research, Mr Wong Xian Yang, highlighted that the suburban retail market will lead the recovery this year, on the back of hybrid working and shifting consumer patterns, while prime retail rents should rise 2 per cent as the gradual easing in border curbs brings tourists back.

He expects prime retail rents in Orchard to increase 1 per cent this year, saying: "As net demand in Orchard retail market turned positive at about 43,000 sq ft in Q4 2021, retail vacancy rates in the area lowered for a second consecutive quarter to 11.3 per cent in Q4 2021 and are expected to further tighten in 2022 amidst a recovering retail demand and limited new supply."

"While net demand for Orchard retail spaces turned in at only about 32,000 sq ft for the whole of 2021, it is a solid performance, considering that net demand in the area was around -118,000 sq ft in 2019 and -355,000 sq ft in 2020," Mr Wong added.

Islandwide, as at the end of the fourth quarter of 2021, there was a total supply of 405,000 sq m gross floor area of retail space from projects in the pipeline, slightly lower than the 428,000 sq m in the previous quarter.

The amount of occupied retail space increased by 25,000 sq m of net lettable area (NLA) in that quarter, slowing from an increase of 33,000 sq m NLA in the previous quarter.

The stock of retail space rose by 25,000 sq m NLA in the fourth quarter of 2021, after increasing 7,000 sq m in the previous quarter.

As a result, the islandwide vacancy rate of retail space was flat at 8.1 per cent at the end of the fourth quarter of last year.

Mr Lam Chern Woon, head of research & consulting at Edmund Tie, said: "International and local brands remain on the lookout for opportunities to expand their presence in the Singapore market, especially in the prime areas and are willing to leverage the current soft climate to secure preferred locations before the eventual rental recovery."

Mr Lam expects suburban retail rents to grow 5 per cent to 10 per cent this year, while prime rents in outside central region (OCR) and other city areas are poised for a recovery. In the fourth quarter of 2021, the OCR occupancy rate edged up 0.5 per cent quarter on quarter to 95.7 per cent.