Fair Tenancy Industry CommitteeWith commercial rents projected to grow this year, the question is how will this impact businesses already grappling with rising costs and whether they have to pass on these costs to consumers in an already inflationary environment.Globally, the rents for prime retail destinations are seeing a rebound after getting pummelled by the Covid-19 pandemic, which is good news for investors.
Since the third quarter of 2021, it has climbed steadily and surpassed 2019’s peak as of the fourth quarter of last year to reach 176.9 points. The real estate services firm said Orchard prime retail rents are expected to have grown by 4.2 per cent year-on-year in 2022, followed by a 2.5 per cent year-on-year growth in 2023. The respective figures for suburban prime retail rents are 3.8 per cent in 2022 and 2.0 per cent in 2023.
Dr Lee Nai Jia, head of real estate intelligence, data and software solutions at PropertyGuru Group, said that Reits tend to acquire strategically-located properties which command higher rents. However, Mr Nicholas Mak, head of research and consultancy at ERA Realty Network, offered a different opinion about why rent will not be unjustifiably raised for tenants.While tenants have the option of moving out to another location if they feel that rent is too high, there is only a limited pool of landlords that they can choose to rent from.
These include rising energy costs — in part due to an energy crunch protracted by the Russia-Ukraine conflict — increases in the cost of goods and logistics caused by supply chain disruptions, as well as manpower-related problems.
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