Orchard retail rentals slip 1.1% in Q2

Extending decline for the sixth consecutive month.

Orchard retail rentals continued to take lashing in Q2, extending its decline for the sixth consecutive quarter.

According to a report by UOB Kay Hian, Q2 saw retail rentals in Orchard Road slip 1.1% QoQ, reflecting an acceleration compared with previous quarterly rentals.

UOB Kay Hian further shares that the pullback implies the prevalence if a tenant’s market in the Orchard retail scene.

Island wide, the retail environment is seen to stay challenging on back of the increased supply, climbing costs, and threat from alternative retail channels. Citing CBRE, UOB Kay Hian reports that this is expected to persist in the medium term, as landlords increasingly take defensive measures like forward renewals to maintain occupancy levels.

Meanwhile, retail landlords CapitaLand Mall Trust (CMT) and Frasers Centrepoint Trust (FCT) have guided for more moderate rental reversions, and UOB Kay Hian expects the retail rental growth to trend in line with inflation.

Moreover, acquisitions and asset enhancement initiatives are seen to continue jumpstarting growth.