Retail rents end five consecutive quarters of declines with 0.3% q-o-q growth in 2Q2023

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Retailers’ confidence in Singapore was exemplified last quarter with the opening of numerous new-to-market brands and international luxury brands – Sun and Sand Sports in Raffles City, Aluxe, Grand Seiko and Atelier Cologne. Similarly, there were several new F&B entrants such as Mister Donut, Luckin Coffee, Jamba Juice and Chaffic Bubble Tea and market returns by F&B and lifestyle retailers, such as Ben’s Cookies and Marimekko.

The Woodleigh Mall opening in 2Q2023 further highlighted the healthy demand for retail space. Similarly, pre-commitment rates of upcoming retail developments, including One Holland Village and Pasir Ris Mall, point to positive growth in the retail sector.

As a result of this growth, net absorption of overall retail space was upwards in 2Q2023, reaching 290,520 sq ft as opposed to the contraction of 75,320 sq ft seen in 1Q2023. Occupancy rates in the Orchard Road area and Central Area both saw an increase of 0.7% to 86.8% and 90.5%, respectively. Additionally, prices and rents in the Central Area rose by 0.3% q-o-q in 2Q2023 after five consecutive quarters of declines.

Wong Xian Yang, head of research Singapore and SEA at Cushman & Wakefield, believes the revival of Chinese tourism will lead to Central Region retail rents continuing to recover and the bottoming out of retail rents towards the end of 2023. Angelia Phua of JLL Singapore added that quantity of prime floor space in quality retail assets should be supported by rising rents.

Overall, the Singapore retail property market appears to be on the rebound and the outlook looks positive for continued recovery. With a safe-haven status and favourable supply-demand fundamentals, many are encouraged by the market’s prospects.