S'pore retail and office prices, rents fall in Q1

Retail and office rents and prices fell in the first quarter as businesses grappled with the economic fallout from the coronavirus outbreak.

Mall rents in the central region dropped 2.3 per cent in the three months to March 31 from the previous quarter. This reversed a 2.3 per cent increase in the fourth quarter of last year.

Prices of retail space in the same region fell 3.1 per cent quarter on quarter compared with an increase of 1.8 per cent in the previous three months.

There was 358,000 sq m in gross floor area of retail space in the pipeline as at March 31, up on the 333,000 sq m at Dec 31 last year, Urban Redevelopment Authority data noted yesterday.

The amount of occupied retail space fell by 43,000 sq m compared with an increase of 26,000 sq m in the previous quarter.

Mr Desmond Sim, head of research for South-east Asia at CBRE, noted that higher degrees of stress were registered in the fringe areas with the rent decline highest among all regions.

The year-on-year decline of 5.1 per cent was also the highest since the first quarter of 2017, when rents fell by 3.7 per cent, he said.

"Landlords will face increasing pressure to strike a balance between vacancy and rents; they might have to lower rents in a bid to maintain healthy occupancy rates," Mr Sim added.

The stock of retail space fell by 15,000 sq m after rising by 29,000 sq m in the previous quarter. This sent the islandwide vacancy rate of retail space to 8 per cent as at March 31, from 7.5 per cent as at Dec 31.

Meanwhile, office rents and prices in the central region dropped for a second straight quarter.

Rents dipped 0.8 per cent but less than the 3.2 per cent fall from the third to the fourth quarter last year.

Office prices fell 4 per cent compared with the 0.5 per cent decrease in the previous quarter.

Ms Christine Li, head of research for Singapore and South-east Asia at Cushman & Wakefield, noted that the rental index of private office spaces in the central region declined at a more gradual pace - down 0.8 per cent compared with the previous quarter, when the decline was 3.2 per cent.

"This could be due partly to companies seeking cash flow protection measures and choosing renewals rather than new leases, which require large fit-out costs upfront," she said.

The amount of occupied office space decreased by 7,000 sq m in the first quarter compared with an increase of 30,000 sq m in the previous quarter.

There was more space available as well, which sent vacancy rates from 10.5 per cent as at Dec 31 to 11 per cent as at March 31.