Chart of the Day: Prime retail rents are getting cheaper

Orchard Road rents clocked in at $29.90 psf.

Prime rental rents in Singapore continued their downward trend in the past year, a report from Savills showed.

For 4Q16, prime monthly rents for Orchard Road and suburbs remained at $29.90 psf and S$28.00 psf, respectively, similar to their 3Q16 levels. On a year-on-year basis, for 4Q16, both Orchard and suburban rents fell 0.1%.

"The factor sustaining rental levels in the fourth quarter was the healthy demand for space," noted Savills.

Meanwhile, after registering four consecutive quarters of deterioration, the vacancy level in 3Q16 reached 8.4%, the highest since the new Urban Redevelopment Authority’s (URA) time series was constituted in 2011.

For 4Q16, vacancy levels fell, with island-wide levels improving 0.9 of a ppt to 7.5%. In the same quarter, the occupancy levels across the Central Region also improved. For the Downtown Core and Orchard Road area, the vacancy levels eased 2.6 ppts quarter-on-quarter to 10.7% and 1.2 ppts qoq to 6.8%, respectively, bringing them to the lowest level of the year.

"These improvements were largely due to the healthier level of demand for retail space in both areas in the quarter. On the other hand, the occupancy rate of the suburban area inched down 0.1 of a ppt qoq to 7.1%. This could be due to the additional 312,000 sq ft of suburban retail space that outweighed the net retail demand of 258,000 sq ft," the report explained.