Savills stated that rents in suburban malls in Singapore are due to decline by around 3%.
Most of the new retail space due to flood the market during 2015 will become available in central areas. This is in sharp contrast to 2014 when most of the supply was based in suburban areas. Some of the developments due to open during this year include the National Gallery Singapore, South Beach and Capitol.
Retailers in Singapore have been adversely affected by falling numbers of visitors and an increase in labor costs. The latest available figures indicate that retail sales, excluding sales of vehicles, have declined by 0.4% during November 2013, compared to the previous year. The Singapore Tourism board has indicated a 3.1% decline in international visitors during 2014, compared to the 2013 figure of 15.6m.
According to Savills, the vacancy rates may remain at a low level during this year as any drop in rents will receive interest from potential tenants.
Savills estimates that prime retail rents on Orchard Road will reach $32.90/ft² per month from the third quarter. This will be the first drop after four quiet quarters. However, prime suburban mall rents should remain firm at $31.10/ft² per month as businesses in malls within large catchment areas remain strong.