Malls Expect An Increase In Retail Rents
People enjoy traveling around the small island of Singapore mainly because getting around the country is rather simple and economical due to the transit system that has evolved over the passage of time. The Mass Rapid Transit or MRT is network of railway lines that spans the entire city state. This has proved to be a very reliable means to get around due to the fact that it is cheap and even during the peak hours the longest a traveller has to wait is 3 min.
With the centre of the island being the main hub of activity, employees from all over the country travel to the “downtown” for work. With the underground subways being the most used mode of transport, it has been made even more useful with construction of underground malls. These malls feature a variety of shops ranging from home goods, salons, fashion and jewellery stores, book stores even cafés and restaurants. So other than just doing the mundane traveling the malls create the perfect atmosphere to just hang out or go on a shopping spree.
Opportune location of these retailers invites attention of everybody passing through the terminals. That is why the analysts forecast an increase in retail rents for the underground malls. They believe the increase in rent could be around 20% to 40% in the years ahead as the “The Land Transport Authority” plans to spend S$60 billion over the next 10 years to further improve the transit system especially aiming at the passenger congestion seen at terminals.
So far around 1.7 million commuters take the MRT trains to and fro their workplaces which show an increase of about 24-7% compared to 2008.
A director of retail at one of the malls said that the increase in retail rent is in direct relation to the increase in populace traffic. It is likely that with the increase of people traveling the landlords will think the tenants are enjoying better business. Moreover the landlords justify their demand of increase in rents with the fact that they have to spend more on marketing their project to gain attention. The average rent now for a retail shop at an underground mall would be around S$15 psf.
There are some underground malls that enjoy more sales than others based primarily on their location. The City Mall, also the first of these malls, connects the commuters to some key destinations. Investment analysts believe that this mall can expect rental values to increase drastically due to its architectural layout, prime location and pedestrian traffic.
Another research analyst also believes that the sales have a lot to do with the architectural configuration of the terminals. For example commuters might just walk through the terminals without even having a look at the stores, where as in another mall to reach to their key junctions the traveller invariably has to go through the shops. This therefore marks the difference of rental values of dissimilar malls.
The underground malls host a mass populace of retailers now. Investment researchers are of the view that the retailers should come up with an idea to collaborate and generate more sales that can be productive for them.
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