Rental rate at Orchard Road is now cheaper than Suburban rents

The increasing number of retail and F&B closures on the island left more retail units vacant, causing the rental rate at the prime area to fell below the suburban rate.

Singapore had suffered a huge blow to her economy due to the Covid-19 virus. Singapore's economy fell into recession in Q2/2020 with a contraction of 41.2% from the previous quarter.

Coupled with sluggish local spending amid an economic slowdown and job insecurity, visitors' arrivals to Singapore also hit historically low levels. This had led to an increasing number of retail and F&B Closures which left more retail units vacant.

Owing to the sharp decline in visitor arrivals and closure of non-essential businesses in malls, the shopper traffic along main shopping belts like Orchard Area and Marina Bay Sands thinned visibly. As a result, the rental rate in these shopping belts fell significantly and this was the first time that Orchard rents fell below Suburban rents since 2008.

In the near term, rents are expected to edge down further as travel restrictions continue to be a drag on the tourism sector. Although the outlook for the Singapore property market remains bleak, you could start researching some Singapore Retail REITs.

Sources: Savills Research

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