Suburban mall rents to hold up well amid turmoil: Report

Suburban stores in malls - such as JCube in Jurong (above) - have a 'stable flow of pedestrian traffic' and their products are less affected by income levels than those in town, according to the report by Savills Singapore. -- ST FILE PHOTO

A NEW report has found that rents for prime suburban retail space may weather the economic uncertainty well as retailers rely less on tourist spending.

It said suburban stores have a 'stable flow of pedestrian traffic' and that products on sale in these hubs are less affected by income levels than those in town.

Prime rents in Orchard Road were flat at a monthly $35.50 per sq ft (psf) in the second quarter, while those in the heartland edged up 1 per cent to $31.10 psf.

The report, compiled by Savills Singapore, said upcoming suburban malls attracted healthy interest while available space in existing malls was limited.

This comes as international names like Shana and TALLY WEiJL are launched in suburban malls, such as JCube in Jurong.

It pointed out that prime suburban rents 'proved resilient' in the last downturn between 2008 and 2009, slipping only slightly by 1 to 2 per cent.

Prime suburban spaces are malls with a strong tenant mix in areas with a high-density population and good MRT connections.

Spanish fashion brand Shana, which launched its first store at JCube in May, found a niche in heartland malls.

'Retail in Jurong has been developing quite well. Rents are more manageable here compared to those in town,' said its operations manager, who declined to be named.

'We are a high-street brand targeting the middle-income crowd and below.

'Retailers in town cater more to tourists and the executive-level crowd.'

The retail sales index for April notched up a healthy 2.9 per cent year-on-year gain.

Despite fears of a global recession, Singapore's growth is still expected to come in between 1 and 3 per cent this year, given the country's healthy economic fundamentals.

Unemployment is low, at just 2.1 per cent in March.

Tourist arrivals worked out to a monthly average of 1.2 million visitors in the first four months of the year.

The retail scene here is still dominated by luxury and high-street fashion players, with more international brands making a foray here in the second quarter.

For instance, Alexander Wang opened at the Hilton Singapore, while Tory Burch set up in Wisma Atria.

Others, like high-end Fendi, expanded with a bigger flagship boutique.

Savills said the Central Business District is 'fast becoming one of Singapore's trendiest lifestyle and entertainment spots'.

It is propped up by a rising number of residents, set to hit 23,300 over the next five years.

Savills expects Singapore to remain a 'key market' for growing international retailers.