Recovery and rejuvenation a boost for Orchard Road and Cairnhill

Tight supply and the narrowing price gap in other areas of Singapore relative to the pricier CCR are likely to continue to support demand in the Cairnhill/Orchard areas, says Tong.Generally resilient marketThe recovery in retail rents, increasing demand for luxury residences, and plans for the rejuvenation of the area all point to the continued relevance and growth of the Orchard Road Shopping belt in the future. The market’s resiliency and adaptation during the pandemic have been remarkable, says Tong.Orchard Road, a central neighbourhood within prime District 9, is known as a luxury shopping belt and is surrounded by popular residential neighbourhoods such as Cairnhill, Newton, and the River Valley district. Cairnhill and Orchard are extremely mature and well-developed areas, which limits the supply of new housing. At the same time, the influx of international and domestic tourists as well as the narrowing of price gaps in other parts of Singapore will continue to support the demand for luxury residences in these areas.The area is also seeing a boost due to plans for the rejuvenation of the Orchard Road shopping belt, with the Tanglin area being highlighted as a future arts and mixed-use neighbourhood, the transformation of the Somerset area into a youth destination and the introduction of family-friendly green spaces in Dhoby Ghaut.Orchard Road is an attractive destination for many due to its locational attributes, such as its central location, proximity to amenities, and transport connectivity. With its robust market and positive prospects, the Orchard Road area is likely to remain a popular destination in the years to come.Orchard Road is a popular destination due to its key locational attributes – its central location, proximity to amenities and transport connectivity. A robust market, the influx of international and domestic tourists and plans for the rejuvenation of the area, have seen the area remain resilient during the pandemic. The narrowing gap of price in other parts of Singapore and the tight supply in the Cairnhill/Orchard areas are likely to continue to support the demand for luxury residences. With the Tanglin area being developed as a future arts and mixed-use neighbourhood and the introduction of family-friendly green spaces at Dhoby Ghaut, the prospects of this area remain positive for the years to come.

The Orchard Road area of Singapore is renowned for its luxury shopping belt and popular residential neighbourhoods of Cairnhill, Newton and the River Valley district. The area has remained resilient and adapted during the pandemic, flourishing due to its key locational attributes – the convenience of its central location, proximity to amenities, and excellent public transport links. With the recent influx of international and domestic tourists, as well as the plans for the rejuvenation of the area, the prospects of Orchard Road remain positive in the years to come.

Retail rents are a leading indicator of the health of the retail market, having initially dropped from $11.08 psf per month (pm) in 2Q2020 to $9.01 psf pm in 1Q2022 due to the pandemic. However thereafter, rental prices picked up to $9.81 psf pm in 4Q2022 with the reopening of international travel and a domestic-led recovery.

The opening of international travel also saw an increase in inbound tourist numbers from 158,000 in 4Q2021 to approximately 2.6 million in 4Q2022. Although Tengah Plantation EC mainland Chinese tourists are yet to return in large numbers, early indications point to a steady return of these tourists throughout 2023.

Tight supply in the Cairnhill/Orchard areas and the narrowing gap of price in other parts of Singapore relative to the pricier CCR, are likely to continue to support demand in these areas. EdgeProp Singapore’s Landlens tool indicates that within approximately 2km of the Orchard/Cairnhill areas are St Joseph’s Institution Junior, Singapore Chinese Girls’ School, River Valley Primary School, and Catholic Junior College.

The market’s resiliency and adaptation during the pandemic have been remarkable, according to Bernard Tong, CEO of EdgeProp Singapore at the EdgeProp Master Plan Masterclass webinar on Feb 25. This is evident from the handful of collective sales that have been closed in recent months in the Orchard Road area. An example is Tanglin Shopping Centre on Tanglin Road which was sold to Pacific Eagle Real Estate for $868 million or $2,769 psf per plot ratio (ppr) in February 2022.

In December, Ming Arcade on Cuscaden Road was sold to Royal Group of Companies for $172 million, which translated to $3,125 psf ppr. This was a new benchmark for commercial en bloc sale in the Orchard Road area.

Orchard Road is likely to remain a popular destination in the years to come, buoyed by its robust market, positive prospects and plans for the rejuvenation of the area. With the Tanglin area being developed as a future arts and mixed-use neighbourhood and the introduction of family-friendly green spaces in Dhoby Ghaut, this area has the potential to be something special.