Retail sales continued to stay in the doldrums despite a y-o-y increase in tourism arrivals of 7.2% in June and 6.7% in July, according to Cushman and Wakefield’s latest retail snapshot report in 3Q2016.

Retail sales, excluding motor vehicles, dipped 3.2% y-o-y in June and 2.3% y-o-y July. C&W reckons that tourists are spending less and the Great Singapore Sale has lost its lustre. Average prime rents on Orchard Road fell 1.2% q-o-q, further closing the rental gap between Orchard Road and suburban areas. In the suburban areas, average prime rents fell 0.5% q-o-q, following strong take-up at newly completed projects such as Waterway Point and Compass One.

Sengkang’s Compass One was the only project completed in 3Q2016 and it officially opened in September. C&W expects Compass One, which has a net lettable area of 272,881 sq ft, to enjoy strong footfall from the steady population growth in the neighbourhood.

C&W believes the retail environment continues to be challenging, owing to weak consumer confidence, weaker-than-expected economic growth and a soft job market. In addition, vacancies in retail malls could worsen, with the ongoing retail business consolidations arising from higher operating costs and competition from e-commerce.