Singapore jumped a notch in the latest survey of the most expensive retail markets conducted by the property firm CB Richard Ellis (CBRE). Prime retail rents in Singapore ranked as the 18th most expensive around the world in Q3 2009, up from the 19th spot in the previous quarter.

Sydney surpassed London as the fourth priciest place to rent prime shop space. This was attributed mainly to the strengthened Australian dollar relative to the US dollar.

These tougher trading conditions cause gaps in shopping centers and high streets, as retailers cease trading and consolidate networks altogether, says CBRE in its latest Global MarketView on the retail industry. “There is increasing differentiation between 'the best and the rest’.”

Due to strong economic growth in some markets, as well as the designed programs of the government, which restored consumer confidence, the retail sector in the Asia-Pacific region is recovering quicker and better than anticipated.

Hong Kong still takes the second spot as the most expensive retail rental market around the world, with an annual value of US$976 per sq ft.

“Prime retail rents vary significantly across the different Asian markets, but in Q3, retail rents in most cities either declined at a slower rate, stabilized or showed a slight up-tick,“ said CBRE.

“However, the threat of supply-side risk remains significant in certain cities in mainland China, Singapore and India, where large amounts of shopping mall construction are expected to be delivered in the coming years.”

Danny Yeo, managing director at Knight Frank and a veteran of Singapore retail property, noted that for the last six months, the average rents for retail space inside suburban malls have been more flexible. It still manages to post low percentage of increases as supplies remain tight. However, along the Orchard Road, the launching of four new malls in 2009 has placed pressure on rentals.

“There's a window of opportunity, which is still open, for retailers to secure space at good rentals in the Orchard Road vicinity,” Mr. Yeo said.

The stock of shop space along the Orchard Road area grew around 17 percent in the first nine months of 2009 compared to the figures in end-2008, according to Knight Frank data.

According to CBRE, New York's reign as the most expensive retail market around the world continued in the third quarter despite a drop of 25 percent in rental rates over the past 12 months.