Retail rents in Central Region of Singapore went down by 2.3% says Urban Redevelopment Authority (URA)

  • Rentals of retail spaces in the Central region of Singapore went down by 2.3% in Q1 2020 from Q4 2019 owing to the deadly Covid-19 outbreak.
  • On the contrast, the previous two quarters i.e. Q4 2019 and Q3 2019 witnessed 2.3% increase in the rents of spaces in the retail sector as per the latest data released by the Urban Redevelopment Authority (URA).
  • The occupancy of retail space in the Island nation went down by 43,000 sq. m. net lettable area (NLA) in the first quarter of 2020 when compared to an increase of 26,000 sq. m. net lettable area in Q4 2019.
  • This decline in the demand of net lettable area is the highest since the previous decline in the first quarter of 2014 which shows the decreasing confidence of the consumers due to the negative effects of Covid-19 outbreak and the upcoming economic recession on the pockets of the consumers and the economy of the country on the whole.
  • The decline in the net demand depicts that more spaces were vacated than occupied which is not a good sign for the retail sector at all.
  • Travel restrictions and strict circuit breaker measures led to a sharp downfall in the number of visitors as well as the retail sales leading to choked cash flow which saw retailers requesting the land owners for rental rebates to seek some ease in the cash flow. Some land owners have extended their supportive hand and offered relief packages including rental rebates in March 2020.
  • The Covid-19 outbreak saw an increase in demand for online retail stores while the demand plunged for small retailers who only have physical stores. This dramatic change in the demand will definitely lead to moderation once the market opens up but it will necessarily alter the future buying habits of the consumers.
  • The amount of retail space in Singapore will increase only by 0.3% in 2020 when compared to the existing space at the end of 2019 which is very low than the average 1.4% increase of space in the last 10 years.
  • There was a total supply of 358,000 sq. m. gross floor area in the retail property sector at the end of Q1 2020 higher than 333,000 sq. m. supply at the end of Q4 2019.
  • The price index for retail space in the core region went down by 3.1% in Q1 2020 as compared to 1.8% increase in Q4 2019 while the vacancy rate for retail space across Singapore went up by 8% in Q1 2020 from 7.5% in Q4 2019.

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