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05 July 2013

No Great S'pore Sale for rent in Orchard area
Monthly rent in prime space holds steady, buoyed by new retailers

Source: Straits Times | Money 
By Cheryl Ong

RENTS for prime space in Orchard Road held steady in the second quarter as a flurry of new retailers sought to establish their presence in the popular shopping belt.

During the period, Italian watch brand Vabene opened its maiden boutique at Mandarin Gallery. Likewise, Hong Kong's i.t multi-brand boutique has set up shop at the newly renovated Wisma Atria.

These retailers helped bolster monthly rentals for the shopping district's prime space at $35.10 per sq ft (psf) in the second quarter, according to property research and consultancy firm Savills yesterday.

"Prime space on Orchard Road will continue to be highly sought-after as South-east Asia becomes the go-to destination for international retailers," said Savills Research senior director Alan Cheong.

Given the strong interest, the retail space crunch along Orchard Road is unlikely to ease any time soon. The only supply coming onstream this year in the district is the orchardgateway mall, expected to have 172,000 sq ft of net lettable area. But about 90 per cent has already been pre-let before it opens by the end of the year.

"Together with the limited supply, we expect prime rents on Orchard Road to remain firm," he said.

In the suburbs, monthly rentals also remained firm at $31.10 psf in the second quarter, due to robust demand from big-name tenants, food and beverage operators, beauty and wellness operators and fashion retailers, according to Savills.

Challenger, Kinokuniya, Marks & Spencer and Robinsons opened new outlets at Jem in Jurong East last month.

In contrast to that in Orchard Road, the suburbs will have more retail space in the pipeline. Two malls, Westgate and Bedok Mall, are set to open by the end of the year, adding about 636,000 sq ft of net lettable area.

But this incoming supply could lead to lower returns as the retail mix is likely to be dominated by F&B and anchor tenants, noted Mr Cheong.

This is because anchor tenants, such as departmental stores, pay lower rents on a psf basis, but take up more lettable area.

In contrast, speciality stores like fashion retailers take up smaller spaces and pay higher rents.

But suburban rents are likely to remain steady for the rest of the year, added Mr Cheong.

"We do not expect a material adjustment in suburban rents at this juncture as the local economic fundamentals are still strong."

HK govt to build 60,700 homes to curb property prices

Source: Straits Times | World

HONG KONG - The government of Hong Kong will sell land for and build 60,700 public homes in the city's north-east area as part of its plan to help curb property prices in the world's most expensive residential market.

The government plans to have the units in the Fan Ling North and Kwu Tung North areas completed by the 2022-2023 fiscal year, secretary for development Paul Chan told reporters in a briefing yesterday. It plans to raise the percentage of public housing in the areas to 60 per cent of the total new supply from the original 43 per cent, he said.

Home prices have more than doubled since early 2009 on an influx of mainland Chinese buyers, near record-low interest rates and a lack of new supply. Hong Kong's Chief Executive Leung Chun Ying took over in July last year after having pledged to increase supply to help make housing more affordable for the general public.

The new homes in the two areas will house about 170,000 people, Mr Chan said.

The government will provide land to build 75,000 public homes in the next five years, and the private sector may sell 67,000 units in the next three to four years, Mr Leung said at his policy address in January.

The city plans to supply 450,000 new homes over the next 10 years, the Hong Kong Economic Journal reported on June 21, citing transport and housing secretary Anthony Cheung.