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Space surge may slow Orchard Rd rent rises

Almost 2m sq ft to be added between now and 2011

AN IMPENDING surge of new shop space in Orchard Road may put the brakes on the growth of retail rents along the shopping stretch.

Almost two million sq ft of new retail gross floor area is set to open in the area between now and 2011, said property firm Knight Frank.

That is about one-third the current retail space on Orchard Road and double the size of Ngee Ann City.

Most of it will come from new malls, with two – Ion Orchard and Orchard Central – due to be completed this year. They are the first new malls to open in Orchard Road in a decade.

Some consultants say the huge increase in retail space in the next few years may make it hard for mall landlords along the prime shopping belt to keep raising rents at the current pace.

But they add that more outlets may not lead to oversupply as long as shopper demand and tourist numbers keep growing.

Knight Frank’s deputy managing director Danny Yeo said the new malls could achieve benchmark rentals, but some older properties may feel the heat.

Monthly rents along Orchard Road grew at a slower 2.6 per cent to hit $45.50 per sq ft at the end of last year, said Knight Frank.

It expects islandwide prime retail rentals to rise a smaller 10 per cent to 15 per cent for this year, down from last year’s 22.1 per cent.

This is mainly due to the influx of new space. This year alone, 930,000 sq ft of new shops could come up in Orchard and Scotts Roads, said consultancy DTZ Debenham Tie Leung. Besides the new malls, the additional space includes extensions to existing buildings.

The latest to jump on the bandwagon are Paragon Shopping Centre, as well as Specialists’ Shopping Centre and the adjacent Hotel Phoenix. They revealed upgrading plans last week.

Experts lauded these plans. ‘This is a chance for older malls to revamp, or introduce new retailers, or change their concepts,’ said Jones Lang LaSalle retail director Daisy Loo.

Wisma Atria, for one, added several new stores last year. Some are from first-time retailers in Singapore, such as Australia’s Cotton On, French footwear label Schu and Brazilian fashion store Beijaflor.

Mall owners say that they welcome the new shopping centres, and do not view them as competition.

‘Our belief is that the number of shoppers to Orchard Road will increase significantly with the new supply,’ said Ms Amy Lim, general manager of pro- perty management at Macquarie Pacific Star.

CapitaLand Retail, which is building Ion Orchard, also sees minimal conflict between the new and old malls.

Chief executive Pua Seck Guan said most of the retailers that Ion Orchard is drawing in are not moving from existing Orchard Road locations. Sixty per cent will be new to Singapore, trying new concepts or opening a flagship store.

 

Source: The Straits Times 15 Jan 08

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