Sky-high retail rents in Singapore still cheaper than Hong Kong's

Singapore moved up from 18 to 14 on this year’s list of the world’s most expensive rents, with prime retail rent standing at US$ 473/ sf/annum.

Hong Kong, however, is still the costliest place to set up shop in Asia and the third globally, with rent at US$1,113/sq ft/annum.

According to C B Richard Ellis’s latest Global Retail MarketView, Asian retail markets have benefited from the regional economic upswing and continued to strengthen in Q3 2010. Retail property performance continued to diverge across mature and emerging markets in the region.

The average prime rent stabilised and in some markets saw a minor uptick, most notably in Shanghai, Beijing, Guangzhou, Tokyo, Taipei and Hong Kong with the majority either stabilising or posting modest growth. Singapore’s
Prime retail rent experienced a - 1.4 per cent dip year- on- year. It was US$448/ sf/ annum (S$52.60 in the Q3 2009. The current S$51.80 psf/month rate is - 0.5 per cent from Q2 2010.

CBRE Research tracks premium retail rents of shops with relatively higher volume of daily foot traffic in a location with a high concentration of luxury brands.

Letty Lee, Director, Retail Services, CBRE Singapore said, “While Singapore has moved up in term s of ranking from number 18 a year ago and number 17 in Q1 2010, prim e Orchard Road rents have become m ore competitive. Landlords, aware that the third quarter was generally quieter post- Great Singapore sale, have been more responsive and creative in supporting tenant businesses”.

"Retailers and landlords are gearing up for the year- end festivities," Lee said, adding that retailers are generally more optimistic about operating conditions for the rest of 2010 as they are encouraged by an astounding 15 per cent GDP growth forecast, higher tourist arrival estimates for 2010 as well as healthy spending due to projected wage growth.

Despite the divergence of rental movements across the Asian region, prime retail locations dominated by major international luxury retail brands remained competitive. However, the threat of a supply imbalance of new retail space in the pipeline remains high in a number of cities across mainland China and India.

"Demand for prime retail space is very strong across the Asia markets given the robust retail spending backed by the continuous improvement of unemployment rates and household incomes in the region. In China, the upbeat consumer sentiment is most prevalent in Shanghai and Guangzhou, thanks to the Shanghai World Expo and the Guangzhou Asian Gam es this year. Meanwhile Hong Kong continues to benefit from the strong influx of Chinese Mainland tourists. These factors collectively pushed up the retail rents for prime retail space," said Nick Axford, Executive Director, Head of Research, Asia at CBRE.

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