Market In Minutes- Singapore Retail June 2021 (Savills) 08 June 2021
Rental declines moderate
Occupier demand started to rise in Q1/2021, but the reintroduction of crowd density controls now suggests a more protracted recovery.
• Food & beverage (F&B) revenue largely declined in Q1/2021 as operators continued to be aff ected by the COVID-19 pandemic control measures such as dine in capacity constraints and restrictions on large-scale events. However, retail sales (excluding motor vehicles) improved in the quarter, largely due to a lower base in the same period last year.
• With the positive net demand of 301,000 sq ft outweighing the net supply of 108,000 sq ft, the overall vacancy rate declined for a second consecutive quarter by 0.3 of a percentage point (ppt) to 8.5% in Q1/2021, the lowest since the onset of the COVID-19 pandemic here in Q2/2020.
• Despite the lack of tourists, the Orchard Area remains resilient with the vacancy rate remaining unchanged at 11.6%. On the other hand, the vacancy level in Suburban Areas declined for a third consecutive quarter by 0.8 of a ppt to 5.2%, its lowest level since Q1/2016. • Savills monthly prime rents in Orchard Area fell, albeit at a slower pace, by 3.0% quarter-on-quarter (QoQ) to S$22.80 psf, compared to the 7.8% decline registered in Q4/2020.
• The more vibrant suburban malls saw a smaller contraction in Savills monthly prime rents in Suburban Areas of 2.0% QoQ to S$24.00 psf.
• Despite the limited supply pipeline over the next few years, the uptick of COVID-19 community cases led the government to backtrack from Phase 3 of the pandemic control measures to reintroduce Phase 2 (Heightened Alert). While the government has provided some form of support to retailers, it is expected that business conditions will remain challenging and rents of malls in both Orchard and Suburban Areas are forecast to decline by 15% and 10% respectively in 2021.
