Suntec City's leasing woes are far from over, analysts warn

Passing rents are below target.

The end is not yet in sight for Suntec City's leasing woes, particularly in light of Singapore's struggling retail scene.

For instance, analysts highlighted that Suntec City Phase 3 has achieved passing rents of $12.12 per square foot per month, which is below the REIT manager's target of $12.59 psf per month.

"Despite the opening of Phase 3, we note that leasing activity has been slow for the refurbished mall. We also note that overall passing rent has consistently fallen 3.7% to SGD12.12 psf/month ever since its first launch of Phase 1, below its initial target of SGD12.59 psf/month," said Ong Kian Lin, analyst at RHB Research.

Tan Xuan of CIMB noted that while management remains hopeful of achieving 100% occupancy at Suntec City, the development remains at risk because 28.3% of its leases are due to expire in 2016.

"We think the retail portfolio could take longer than expected to ramp up in terms of occupancy and rents.2.7% of retail leases are set to expire in 2015 and should be a non-event for SUN. However, we will watch out for the 28.3% of leases set to expire in 2016, which is coming mainly from Suntec City Phase 1,” she said.