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Business
Review
are estimated to have
increased in 2013, reaching
95.5% and 95.7% respectively.
The most significant increase
in average occupancy rate
was seen in the Orchard Road
sub-market, with the average
occupancy rate rising by
3.7 percentage points. The
strength of interest from retailers
in the Suburban sub-market
is highlighted by the fact that
JEM and Bedok Mall opened
effectively fully leased, while
Westgate opened at close to
90.0% committed occupancy.
RETAIL RENTAL &
OCCUPANCY OUTLOOK
Broadly speaking, the economic
environment looks supportive
for ongoing rental growth
in Singapore. We expect
retail sales to continue
growing at a healthy average
rate of 4.0% per annum
through to 2018. After a number
of volatile years, the outlook
for the Singapore economy
appears to have improved and
we expect to see this flow
through to retail sales data.
New retailers continue to enter
the market, with Singapore
being seen as a relatively easy
entry point for the Asian market.
Retailer demand appears healthy,
evidenced by the successful
absorption of the new retail floor
space of JEM, Westgate and
Bedok Mall. However, retailers’
expansion plans will to some
degree be constrained by the
rising employment cost in view
of the implementation of new
foreign labour restrictions in 2013.
Healthy demand, combined
with a gradual moderation
in the amount of new floor space,
is likely to continue to push up
occupancy rates. As noted above,
the occupancy rate reached well
above 95.0% in 2013, at
which point the pressure on
rents is likely to start increasing,
particularly in strong centres
in good quality locations. Over
the next year, we expect to see
occupancy rates remain flat on
Orchard Road while in suburban
areas we expect a marginal
decrease in occupancy rates
as a result of the lagged effect
of the significant amount of
retail stock delivered in 2013.
In 2015 and 2016, it is expected
that occupancy rates will firm
in both sub-markets.
With high levels of occupancy
and strong market fundamentals,
rents are expected to continue to
increase. Rents on Orchard Road
are expected to continue to grow
at around 3.0% per annum over
the next few years, thanks in part
to continued strong growth
in tourist numbers.
The Suburban sub-market had a
weaker than expected year in 2013;
we expect now that the new retail
floor space of JEM, Westgate and
Bedok Mall have been successfully
absorbed, stronger rental growth is
likely to return to the market. The
majority of new floor space in the
near future, however, will be in
the Suburban sub-market which is
likely to keep rental growth slightly
below that achieved in the Orchard
Road sub-market.
CONCLUSIONS
Despite a small downturn in the
Singapore retail market in 2013,
the medium-term outlook remains
positive, with the market expected
to rebound in 2014 on the back
of resilient domestic growth and
the forecast continued in global
economy recovery.
Lend Lease (5.7%) and Frasers
Centrepoint (5.7%) being the
closest competitors. The scale
at which CMT operates gives
it the opportunity to achieve
economies of scale in centre
management and leasing,
and also allows it to distribute
its risk profile across different
types of centres, and different
sub-markets.
RETAIL PROPERTY
PERFORMANCE
According to CBRE, prime
retail rents in the Orchard Road
sub-market grew by 2.8%,
averaging S$32.50 per sq ft
per month over 2013, while
prime retail rents in the Suburban
sub-market rose more modestly
by 0.5% to an average of
S$29.90 per sq ft per month
over the year.
Rental growth over the first
three quarters of 2013 was relatively
flat in both the Orchard Road
and Suburban sub-markets.
However, in the last quarter of
2013, stronger macroeconomic
performance and significant
interest from a number of
new-to-market international
retailers in prime retail locations
drove an increase in rents in both
sub-markets, with quarter-on-quarter
growth recorded at 3.4% and
1.7% in the Orchard Road and
Suburban sub-markets respectively.
Retailers continue to show great
interest in Singapore with 27
new-to-market international
retailers entering the market in
2013, second in Asia after Hong
Kong (according to CBRE).
Based on the Urban Redevelopment
Authority’s first three quarters
data, average occupancy rates in
both the Orchard Road
and Suburban sub-markets
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