Globally, Fifth Avenue in New York is the priciest, at US$3,550 per sq ft per year
According to Colliers International's Global Retail Highlights 2014 report, Orchard Road's retail rents stood at US$348 per sq ft per year, edging downwards just 0.7 per cent year on year in local terms. Colliers used an exchange rate of US$1=S$1.26 as at March 31 this year.
Topping the list of Asia-Pacific's priciest retail rents is Hong Kong's Queen's Road Central at US$$2,073 per sq ft per year. Hong Kong accounted for the top three spots in Asia, with Canton Road in Tsim Sha Tsui and Causeway Bay in second and third spots respectively.
Tokyo's Ginza-Chuo Street was in fourth, while Shanghai's West Nanjing Road and Beijing's Wangfujing were in fifth and sixth place respectively.
In terms of the global rankings, Fifth Avenue in New York was the most expensive, at US$3,550 per sq ft per year. Hong Kong's Queen's Road Central and Canton Road rounded off the second and third places for priciest retail rents worldwide. Other shopping areas which made the top 10 include Madison Avenue (US$1,643) in New York, Paris' Champs-Elysees (US$1,543), London's Bond Street (US$1,340), Hong Kong's Causeway Bay and Bahnhofstrasse (US$998) in Zurich.
"As a gateway market to South-east Asia, Singapore remains a desirable market for new brands and an attractive destination for international occupiers," said Chia Siew Chuin, director (research and advisory) at Colliers International. "However, despite the demand for space by new stores and food and beverage (F&B) outlets, the retail environment is challenging due to rising costs, shrinking profits and a tight labour market."
This has helped keep retail rents in Orchard Road more or less flat year on year. Brands that have entered the market this year include Adolfo Dominguez, Etam and Cath Kidston. In addition, newly revamped mall The Heeren saw the relocation of department store Robinsons.
At the same time, Singapore's most famous shopping street today faces competition from shopping centres in the downtown areas, suburban malls as well as retail locations in other areas such as the fringes of the city. Monthly gross rents for prime retail space in Orchard Road softened slightly to S$36.50/sf in Q1 14, from S$36.75/sf in Q1 13, the report highlighted.
Ms Chia added: "The physical retail trading environment will also remain tough and demanding on retailers and F&B operators due to increasing competition from e-commerce retailers and online food delivery services. Consequently, retail space rents, which have generally remained unchanged during the year, are likely to remain flat in the near future."
The report - which examined 125 retail real estate markets in 50 countries - also highlighted that the global outlook for retail looks encouraging, backed by a recovery in the US, a robust performance by high street markets as well as ongoing development in emerging economies.
This is prompting international brands to make forays into new markets, while the luxury segment of the retail industry is shining in key markets in the US, Europe and Asia, fuelled by rising incomes among top earners.
Still, e-commerce is proving to be a major challenge for both luxury and traditional retailers worldwide, forcing firms to turn creative in order to keep the cash register ringing.
Among the strategies listed to combat the growing popularity of e-commerce is transforming stores into product showrooms to boost foot traffic.
Source from Business Times