Thursday, October 12, 2006

More economic drivel from the news

If retail sales are up 8% since 2004 and the trend is expected to continue, what would you expect to happen to the cost of renting retail space? If you answered -- rents will increase -- then give yourself full marks. This journalist fails because judging from his article's title he seems surprised by such an outcome.

Retail and F&B sectors set for higher growth even as rental goes up
Owners of the retail space see how well the retailers are doing and that they want to rent more space. Then why is it surprising that the owners raise rents?

Retailers bagged good sales in the first half of this year and the trend is set to continue.

However, analysts say strong demand for prime retail space is likely to push rentals up by some five percent over the next 12 months.
The scarce resource in this case is the retail space, which is relatively fixed in the short run. There are plenty of merchants or prospective merchants though. As such, the land owners have the power to extract some of these new earnings by raising rents.

Retail and F&B sectors set for higher growth even as rental goes up
Channel NewsAsia
Wong Siew Ying
11 October 2006

SINGAPORE: Retailers bagged good sales in the first half of this year and the trend is set to continue.

However, analysts say strong demand for prime retail space is likely to push rentals up by some five percent over the next 12 months...

Retail sales was up by nearly 8 percent compared to 2004, while F&B spending rose by 2.8 percent...

This is largely due to tourism arrivals, healthy economic growth and high employment rate.

The retail sector is expected to do well again, with sales rising by 5.3 percent in the first half of this year...

Most shopping complexes are almost fully leased and analysts forecast an increase in rental due to the high demand...

There are more small specialty shops and street level shopping, and analysts say such retailing formats will encourage youngsters to set up their own business and give larger departmental stores something to think about...

2 Comments:

Blogger EclectEcon said...

A terrific example of confusing a shift in the demand curve with a movement along the curve!

7:12 PM  
Blogger a singapore economist said...

As usual, eclectecon cuts right to the heart of the matter!

12:00 AM  

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