Retail and office spaces saw rent prices down in Q1 2020

Rents and prices of office spaces within the central region also fell for a second consecutive quarter.

Singapore saw rents and prices of retail and office spaces drop in the first quarter of 2020 as businesses contend with the economic fallout from the Covid-19 outbreak.

Mall rents within the central region fell 2.3% in Q1 2020, reversing the 2.3% hike posted in Q4 2019. Retail space prices also declined by 3.1% compared to the 1.8% increase in the previous quarter.

As at 31 March, there was 358,000 sq m in gross floor area of retail space from projects in the pipeline, up from the 333,000 sq m at 31 December 2019, reported The Straits Times citing Urban Redevelopment Authority (URA) data .

The amount of occupied retail space declined by 43,000 sq m versus the 26,000 sq m increase seen in the previous quarter.

Desmond Sim, Head of Research for South-east Asia at CBRE, said higher degrees of stress were posted in the fringe areas with rent declining 5.1% year-on-year – its highest since Q1 2017 when rents dropped 3.7% and the biggest drop among all regions.

“Landlords will face increasing pressure to strike a balance between vacancy and rents; they might have to lower rents in a bid to maintain healthy occupancy rates,” added Sim.

The stock of retail space dropped 15,000 sq m, following the 29,000 sq m increase in the previous quarter. This brought the islandwide vacancy rate of retail space to 8% as at 31 March from 7.5% as at 31 December 2019.

Meanwhile, rents and prices of office spaces within the central region fell for a second consecutive quarter.

Rents slid 0.8%, which is less than the 3.2% drop from the third to fourth quarter of 2019.

Office prices declined 4%, continuing the 0.5% drop posted in the previous quarter.

Christine Li, Head of Research for Singapore and South-east Asia at Cushman & Wakefield, revealed that the rental index of private office spaces within the central region fell at a gradual space at 0.8% compared with the 3.2% drop in the previous quarter.

“This could be due partly to companies seeking cash flow protection measures and choosing renewals rather than new leases, which require large fit-out costs upfront,” she said.

In Q1 2020, the amount of occupied space also decreased by 7,000 sq m compared with the 30,000 sq m increase in Q4 2019.

Vacancy rates also increased to 11% in the first quarter from 10.5% in the previous quarter.

Source: CommercialGuru, 27 Apr 2020