SINGAPORE (EDGEPROP) - Retail tenants are looking beyond the immediacy of the economic disruption caused by the novel coronavirus, and prime retail rents are expected to resist downside pressures this year, barring an escalation of the ongoing outbreak, based on a report by Savills Singapore.
Alan Cheong, executive director of research at Savills Singapore, says: “Should [tenants] give up the space, under the assumption that the coronavirus event will not last beyond the short term, they will be left hanging without representation in a prime spot in a mall when business returns.”
The occupancy rate for prime retail units is also expected to remain stable in lieu of the limited supply in the pipeline. The upcoming supply largely comprises ancillary retail space from mixed-use developments, and the overall retail supply pipeline has fallen by more than half to average 513,900 sq ft per annum from 2020 to 2023.
Landlords are also reinvigorating retail assets to remain relevant. Next month, 112 Katong Mall will shut its doors until 2021 for a revamp, following its last redevelopment in 2011. Tenants of Liang Court are also expected to vacate next month as the entire site undergoes redevelopment led by City Developments and CapitaLand.
Meanwhile, Cheong says that “overly focusing one’s attention on the coronavirus outbreak and coming up with “what-if” scenarios is unhelpful”. He adds that retailers and landlords should look forward and focus on fundamental and structural issues impacting the retail market, such as online shopping, high hotel room rates, budget air travel, and food delivery entities.
Read also: