SINGAPORE (EDGEPROP) - Retail rents fell by 4.5% q-o-q in 3Q2020, while prices of retail properties rose 2.2% q-o-q, based on statistics released by URA on Oct 23.
The fall in rents over 3Q2020 marks the third consecutive quarter of decline, following the fall of 3.5% in 2Q2020, and is a historical low, say consultants. Since the start of 2020, rents in the Central Region have already fallen by 10%, notes Desmond Sim, head of research for Southeast Asia at CBRE.
“The retail market remains two-tier, with the drop largely contributed by poorer performances in secondary spaces and corridors. In addition, rentals for malls in the City Hall/Marina Centre, Orchard and Downtown Core locations are likely to be more affected, owing to lower footfall in the absence of tourists and office workers,” says CBRE Research.
Closures in 3Q2020 included international fashion retail brands Top Shop and Topman in ION Orchard and VivoCity, and H&M in Tampines Mall. Department stores Tokyu Hands and Robinsons also shuttered their stores in Westgate and Jem, respectively. New openings, mostly deals concluded prior to Covid-19, continued to lag behind attrition, resulting in a third consecutive quarter of contraction in the overall net absorption of retail space, and dragging down rents, notes Tay Huey Ying, head of research & consultancy at JLL Singapore.
Meanwhile, the occupancy rate fell by 50,000 sq m (538,200 sq ft) in 3Q2020, an improvement over a decline of 93,000 sq m in 2Q2020.
Although net absorption in the market remains negative, new openings from retailers in the athleisure and F&B sector have helped to negate the extent of the negative net absorption from closures and consolidations in the retail sector, says CBRE’s Sim.