Average Monthly Gross Rents of Prime Retail Space in Orchard Road Further Ease by 1.6 Per Cent


According to international property consultancy, Colliers International, retail malls in Orchard Road are facing the double whammy of fierce competition for domestic and tourist dollars, as well as geographical competition from sub-urban malls that have drawn shopper traffic to other parts of the island.  

The average monthly gross rents of prime retail space in Orchard Road decreased from S$35.83 per sq ft in 1Q 2015 to S$35.25 per sq ft in 2Q 2015.  This reflected a fall of 1.6 per cent quarter-on-quarter (QoQ) by the end of June 2015, after having already dropped 0.9 per cent in the March quarter. 

Over at the Regional Centres, the monthly gross rents for prime retail space held steady during the June quarter – unchanged from S$33.94 per sq ft recorded three months ago.  

By far, the monthly gross rents of prime retail space in the Regional Centres have increased by a total of 1.7 per cent since 1Q 2013. 

Consequently, the rental premium that prime retail space in Orchard Road commands over similar space in the Regional Centres further narrowed – from 6.9 per cent as of the end of 2014 to 5.6 per cent to in 1Q 2015, to 3.9 per cent in 2Q 2015.  

Mr Calvin Yeo (杨光伟), Deputy Managing Director of Colliers International, says, “The retail property sector has continued to experience attrition, with reports on closure of shops and certain malls in Orchard Road suffering from poor shopper traffic and pedestrian footfalls.   

However, given the demand for more retail variety by an increasingly more affluent consumer base, new-to-market F&B and retail operators continue to set up shops in Singapore. This has helped to shore up occupancy rates of retail malls and cushion rental falls.” 

Capital Values

Transactional activity in the strata sales market remained stifled in 2Q 2015 by a lack of new launches, subdued investor interest and the effects of the Total Debt Servicing Ratio. 

44 caveats were lodged in the first 11 weeks of 2Q 2015 for strata-titled retail premises, which is expected to round up to about 50 when all the caveats are lodged for the quarter.  New sales bought directly from developers of yet-to-be-built properties accounted for 14 deals, which is approximately 31.8 per cent of transactions during the period. 

Hence, the average capital values for prime Orchard Road strata-titled retail space remained unchanged at S$6,803 per sq ft in 2Q 2015, while that for Regional Centre stayed flat at S$4,491 per sq ft at end-June 2015. 


The outlook for the retail sector for the rest of 2015 is expected to remain challenging. 

On the back that demand is offset against the tough conditions of labour and occupational cost pressures in a competitive operating environment, retail rents and prices are expected to remain at the current levels, or might moderate downwards. 

Ms Chia Siew Chuin (谢岫君), Director of Research & Advisory, says, “The recent fall in tourist arrivals has had an impact on the malls in Orchard Road. Retailers are making inroads into sub-urban areas to extend their reach where there are sizable residential populations. More upmarket brands are also sprouting up in decentralised areas, especially designated growth areas like Jurong East.” 

She continues, “With convenient access to shopping and dining options at suburban malls, residents no longer need to venture to Orchard Road for daily necessities, retail variety or F&B choices. This is unless there is a specific shopping need or special occasion to dine in a restaurant that only Orchard Road can offer. Nonetheless, there is still a significant portion of locals, especially the young and trendy, as well as professionals, who can be spotted at Orchard Road at weekday nights and weekends.” 

Taking into consideration the muted tourist sector and competition from other malls in decentralised locations, the average monthly gross rents for prime ground floor retail space in Orchard Road might decline by up to five per cent in 2015.  

Over at the more resilient Regional Centres, the average monthly gross rents of prime ground floor retail space could be comparatively better, between -1 per cent and 1 per cent, in 2015.  

Transactional volume is unlikely to improve in the strata-titled retail space market.  Therefore, capital values are expected to continue to largely trend laterally in 2H 2015, as they did in the first half of the year.