Singapore’s retail rental growth stabilises, and more headlines

PropertyGuru’s real estate news roundup begins with Singapore’s retail rental growth showing further signs of moderating in the second quarter. In other news, Metro Manila rental prices for office spaces have continued to decline despite an improved vacancy rate. Lastly, Macau’s housing market transaction volume decreased by 12.7 percent year-over-year in the first half of the year.

Singapore retail rents flatten amid stable occupancy – Savills

Savills Research shares in RETalk Asia that Singapore’s retail rental growth is showing further signs of moderating in the second quarter, as economic uncertainty and weak retail sales have landlords focusing on occupancy rates while keeping their rental expectations realistic.

Average monthly rents in the Orchard Area rose by 0.6 percent quarter-on-quarter (QoQ) to SGD23.00 per square foot (psf). The average retail passing rent in Savills’ basket of retail properties in the Suburban Area remained unchanged at SGD14.70 psf in Q2.

The island-wide vacancy rate for retail space slipped marginally to 6.6 percent in Q2, compared to 6.7 percent in Q1. This was attributed to an increase in demand (495,000 sq ft), which outpaced the increase in supply (463,000 sq ft) in Q2. Savills Research notes that the net demand in the second quarter was significantly higher than the 86,000 sq ft in the first quarter. This is because of the improvement in the absorption rate across all regions, except in the Orchard Area where there was no net absorption in Q2. Owing to a healthy pre-commitment rate in the newly opened Paris Ris Mall, the Suburban Area posted the highest net demand over the last five quarters and saw a marginal decrease of -0.1 percentage points (ppt) QoQ to 4.6 percent.

Metro Manila office rental prices decline despite improved vacancy rate

Vacancy rate in Metro Manila’s office market improved in the second quarter of 2024, yet rental prices for office spaces have continued to decline since 2023, according to real estate services and investment firm CBRE Philippines.

“This may look good on the upper hand, but zooming into the prices of each sub-district, we have been noting a trend of declines or reductions in rates as well,” CBRE Philippines Research Head Samantha Laureola said during a briefing last week.

As reported in BusinessWorld, Metro Manila’s fair market rents (FMR), which represent the typical rental prices for office spaces, have decreased by 2 percent to 19 percent across various sub-districts from the first quarter of 2023 to the present. The Bay Area’s FMR fell 19 percent from the first quarter of 2023, followed by a 13 percent decrease in Makati A&B premium office buildings. Alabang also went down 10 percent, North Bonifacio declined 3 percent, and Makati Prime went down 2 percent.

Meanwhile, Quezon City rose 9 percent and McKinley inched up by 6 percent. Ortigas also increased by 2 percent, and Bonifacio Global City (BGC) rose by 0.4 percent.

“So lower rates, potentially more attractive lease structures for clients, higher demand, and lower vacancy overall,” she added.

Macau’s residential sales continue to decline in 2024

Data from DSF indicate that the housing market transaction volume decreased by 12.7 percent year-over-year in the first half of the year, while 172 presale homes were recorded during the same period. Following the launch of ‘The Zenith’ in Taipa, other developers have become more active in launching new projects such as ‘YOHO Twins’, ‘Waterfront Duet’, and ‘Le Chun Fok’. To boost inventory sales, developers have adopted a conservative pricing strategy for new properties, aligning them closely with secondary market prices.

The World Property Journal reports that in the first half of 2024, two projects were issued presale permits, offering 2,072 new homes with a total gross floor area of 238,505 sqm, mainly on the Macau Peninsula.

The residential leasing market continues to be bolstered by strong demand for rental properties from expatriate employees, with new projects offering rental incentives, leading to an increase in the supply of rental properties in the market.

The Property Report editors wrote this article. For more information, email: [email protected].