Prime Retail Rents here 14th Highest Globally
The average cost of prime retail rentals in the world has stabilized although it is still considered as high. There are some highly urbanized areas where there is a lack of retail space rentals; while there are also other areas experiencing an excess of retail space rentals where there are no takers. There should be a balance between these two in order to avoid a market bubble.
New York is still the number one contender with the highest annual prime retail rent in the amount of US$1,800 psf. Sydney ranks second with an annual prime retail rent of US$1,218 psf; with Hongkong coming in third place with an annual prime retail rent of US$1,113 psf.
Singapore went up a few notches to rank as number 14 globally, although the prime retail rents here went down slightly in the third quarter. Last year, Singapore’s ranking was number 18.
Singapore is now the 14th most expensive place in the world for prime retail shops.
In Q3, the average prime retail rent here was US$473 per sq ft per year ($51.80 psf per month). This is according to CB Richard Ellis. This was a 1.4 per cent drop from last year; and a 0.5 per cent fall from Q2. However, we have still managed to hold ourselves up with the rank of number 14th country with the highest prime rental rates in the world. Our businesses are doing well. Our economy is doing fine.
According to CBRE Singapore retail services director, rents in the prime area of Orchard Road have become more competitive. Property landowners here have become more cooperative and responsive in supporting the businesses of their tenants. They are aware that activities in the third quarter are generally slower and quieter after the Great Singapore Sale. And so they are supportive of their tenants’ creativity and efforts to generate more business.
Here in Singapore, shop retailers are eagerly awaiting the year-end festivities. They have been encouraged by a 15 per cent growth forecast, the estimates of higher tourist arrival for 2010 as well as a change in spending habits due to a projected growth in wages. These forecasts and estimates have made the shop retailers generally more optimistic about their business growth up till the end of 2010.
Some of the countries in the Asia Pacific region that ranked slightly ahead of Singapore are Tokyo, Melbourne and Guangzhou.
Some Asian markets such as Shanghai, Beijing, Tokyo, Taipei and Hongkong experienced an stabilized or even slight increase in the average prime rent cost. However, in some cities in China and India there is still the threat of a glut in new office retail space. There is always the fear of a real estate market bubble. There is always the problem of a lot of office rental space that is left without tenants This is often caused by unrealistic forecasts
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