Complete Property Market Updates of Singapore

June 19, 2008

Meritus Mandarin seeks better return on space

Filed under: Commercial,General,Hotel — Propertymarketupdates @ 4:47 am

ANOTHER major hotel has opted to squeeze more revenue out of underperforming space by converting some function rooms to posh retail outlets.

The Meritus Mandarin hotel will turn the rooms into boutiques to bolster its shopping extension, Mandarin Gallery, which is itself undergoing a $200 million makeover.

Once the renovations are completed in June next year, the number of shops will double from 60 to 120, and the mall’s total gross floor area will be increased by 20 per cent to 215,000 sq ft.

This will allow owner Overseas Union Enterprise (OUE) to maximise profits, said Dr Clement Wang, the firm’s executive vice-president of investor relations.

He told The Straits Times that the new ground floor rent of ‘at least $50 per sq ft (psf) to $60 psf’ is about four times what OUE would earn from renting out the function rooms.

Mandarin Gallery, on the corner of Orchard Road and Orchard Link, will feature six duplex stores – Montblanc, Emporio Armani, Marc by Marc Jacobs, Dolce&Gabbana, Bread & Butter and an unconfirmed tenant.

Dr Wang said the slowing economy will not affect business at Mandarin Gallery as its tenants will open in time for Christmas next year.

He said: ‘We believe things should pick up by then. There will always be a market for the high-end, the reason being that we have many international guests.’

OUE chief executive officer Thio Gim Hock said the hotel had 500,000 guests last year, including 100,000 from Indonesia and 50,000 from Japan.

The Meritus Mandarin move follows the announcement by The Fullerton Hotel on Monday that it will convert more than 5,000 sq ft of under-utilised function room space into four luxury fashion and jewellery shops.

It is also a sign of the intensity of the battle to lure shoppers with prime frontages at Orchard Road.

Mandarin Gallery’s ’show-and-sell’ tactic – the renovations will create six duplexes with glass windows about 10m high and 152m long – rivals that of upcoming mall Ion Orchard. This will also have six glass duplexes when it opens next year.

And Paragon Shopping Centre, sited just across from Meritus, is undergoing a $45 million facelift that will deliver pop-out, glass-boxed shop fronts housing luxury labels.

Source : Straits Times – 23 May 2008


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