SHKP upbeat on Ion Orchard project in Singapore
Sun Hung Kai Properties' (SHKP) joint-venture foray into Singapore's prime retail strip has bucked a falling trend in rentals in the city state, says Jimmy Wong Chin-wah, an executive director of Sun Hung Kai Real Estate Agency.
Ion Orchard, a new luxury mall with an integrated residential building that opens on Orchard Road, had already found tenants for 96 per cent of its retail space, said Mr Wong, and rent per square foot had exceeded the project's targeted amount and now stood at S$20 (HK$108).
Total rent revenue for the mall, which is a joint venture between SHKP and Singapore developer CapitaLand, is projected at HK$1.1 billion per year.
About 70 per cent of the 96 per cent leased shops have opened for business since July 21. The positive comments from Mr Wong contrasted with a negative report just released on Singapore's retail rental market by consultant CB Richard Ellis.
The CBRE report finds that across the whole sector average monthly rentals for Orchard Road retail units fell 7.8 per cent in the second quarter to S$33.90 from S$36.80 per square foot in the third quarter of last year.
But Sulian Tan-Wijaya, a senior director of retail and lifestyle in the Singapore office of consultants Savills, said not all landlords on the retail strip suffered the same fate.
'Prime retail property rentals were not as badly affected as everyone had expected,' Ms Tan-Wijaya said. 'They have definitely dropped but done quite well considering the economic crisis and with the new suppliers coming into the top end of the market.'
She said the relative stability of prime retail property rentals was helped by local demand and demand from top luxury brands like Louis Vuitton.
SHKP's Mr Wong said that even though the sharp slowdown in economic growth had a widespread impact on business, it had not severely affected the confidence that Ion Orchard tenants had in the likely performance of the mall and thus there had been no problem renting out the shops.
The mall offers 640,000 square feet of net lettable space on eight floors with 335 shops.
Out of the 96 per cent leased shops, 70 per cent are made up of new to market shops, flagship stores and new concept shops
A feature of the mall is a total of 10 retail duplexes which have been taken up by a variety of mass appeal and premium luxury brands.
Six of the luxury brand duplex stores fronting Orchard Road will account for a combined space of more than 50,000 square feet.
But while luxury malls such as Ion Orchard seemed to show few signs of being negatively affected by the economy, Letty Lee, a director of retail services at CBRE Singapore, expects a further decrease of rental prices for prime space along Orchard Road. 'We expect Orchard Road rents to fall 10 to 12 per cent in 2009 and remain flat in 2010.'