ST : Rental spike at nearby malls

Jan 15, 2010

Rental spike at nearby malls

TWO nearby malls have raised rents in anticipation that their tenants will be cashing in on the bigger crowd once Resorts World Sentosa opens.

Businesses at VivoCity and HarbourFront who have renewed leases recently told The Straits Times that they have seen a 5 per cent to 10 per cent spike in rental rates. But they are choosing to bite the bullet - hoping it will pay off when the integrated resort (IR), which will start opening in stages from next week, pulls more spending visitors through the malls.

Their optimism stems from Sentosa's plans to encourage visitors to use public transport, mainly the Sentosa Express - a train that shuttles visitors to and from VivoCity and the island.

The service has contributed to the 40 million visitors that throng VivoCity annually, many of whom also spill over into the neighbouring HarbourFront.

Mapletree, which owns both properties, confirmed the rent increase, but would neither say how many tenants were affected nor the percentage of the increase.

When asked if the raise in rent had to do with the IR's opening, Mapletree cited market conditions, but recognised that the malls stand to benefit greatly from the IR.

To help attract the crowds, Mapletree has promised tenants to roll out promotional activities targetted at the IR's tourists, on top of their usual promotions.

But some tenants question the timing, saying the rental hike may be premature, given that only four hotels will open next week. The rest of the IR will open in phases over the next year.

'It will take some time before business will really pick up, so it may not be justifiable to increase rent now,' said Mr Michael Leong, manager of The Orange Lantern in HarbourFront.

Nevertheless, the Vietnamese restaurant has accepted a 5 per cent rental increase, seeing it as a worthwhile tradeoff.

'When VivoCity opened, business eventually picked up by 20 per cent. We hope to see a similar increase when the IR opens,' said Mr Leong.