An Analysis of Retail Rental Renewal Trends Using Micro Data

In 2013, URA’s retail rental index declined by 0.8 per cent, extending the 0.5 per cent decline in 2012. The decline in retail rent was in line with the weak performance of retail sales over this period. In particular, the increase in the Retail Sales Index (excluding motor vehicles) moderated to 1.1 per cent in 2013, from 1.7 per cent in the previous year.

Notwithstanding the decline in the retail rental index, some retailers have expressed concerns about the steep rental increases that they face when renewing their leases. This box article analyses the trends in rental renewals, which would more closely approximate the experience of retailers on the ground.

Using anonymised retail rental transaction data from the Inland Revenue Authority of Singapore(IRAS), we identify cases of rental renewals among all the transactions recorded over the period 2000to 2013. We then analyse the cumulative increase in monthly rent per square metre faced by retail companies at the point of lease renewal (i.e., difference between the rent in the new rental contract and the rent in the previous contract). Finally, we focus on rental renewal trends in the last two years, including by the type of ownership of the retail space.

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