By Lip Kwok Wai, Alice Chia | Posted: 22 December 2012 2141 hrs

SINGAPORE

Prime area rent for shopping malls and retailers in Orchard Road inched down 0.28 per cent this quarter, compared to the previous quarter.

In a report by Savills World Research, average monthly rent in prime areas in Orchard Road were S$35.1 per square foot in the fourth quarter.

This is a slight drop from the S$35.2 per square foot in Q3.

Analysts felt that this is due to adjustments in the market, as rent in the area were growing too fast previously.

Alan Cheong, director of Savills Research said the fall could be due to over-expecting the level of tourism in Singapore.

He said: “While (tourism) did increase, apparently the spending power did not quite live up to its expectation. Rent and performance in the Orchard Road belt will be dependent on tourism trade and on the state of the economy.”

More retail spaces will also be available soon.

Recently, Plaza Singapura completed its expansion works, providing 80 more shops.

A larger scale development, Orchard Gateway, will provide 180,000 square feet of retail space next year.

Analysts also say that a gloomy economic outlook ahead could also see rent fall by up to 3 per cent, and if economic growth slows, people will spend less.

Retailers may then take a hit, in turn exerting a downward pressure on rent.

– CNA/xq