Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Provided the relentless high-cost setting and the considerably competitive F&B scene, the outlook for the retail remains tough, claims Knight Frank. On top of that, sweeping tariffs announced by United States Head of state Donald Trump might pull down business view. “For a small trading state like Singapore, this may have far-reaching results that might weaken [Knight Frank’s] delicate 1% to 3% development forecast of prime retail rental fees in 2025,” says Hsu.
The mostly stagnant leas follow blended retail sales productivity in 1Q2024. Whilst data from the Singapore Department of Statistics revealed retail sales omitting car reviving from a year-end depression to strike $4 billion in January on the back of Chinese New Year festivities, it ultimately slipped to $3.2 billion in February before moving back up to $4.2 billion in March.
Singapore prime retail rents stayed mainly condo in 1Q2025 amidst a retail environment that continues to encounter rising operating expense and labor restrictions, claims Knight Frank Singapore. According to a research report released by the company in April, prime retail rents in Orchard equated at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
Citing data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that a total of 3,047 F&B businesses closed down in 2024– the highest figure ever since 2005. On the other hand, 3,793 F&B businesses were created the similar year, the second-highest number ever since 3,934 openings in 2021.
Prospective actions include restricting the amount of F&B permits released within a particular place, capping the percentage of net lettable area allocated for F&B in a mall to a stakeholder-reviewed proportion, or enforcing a tax obligation on F&B chains that expand beyond a specific number of outlets within a designated period. “These can all work as a call for F&B drivers not to bite off more than they can chew and spread out the development of F&B to a more fair and sustainable pace,” adds Hsu.
The fast entries and exits of F&B brands might indicate an indication of overgrowth and the demand for intervention to stabilise the marketplace, claims Knight Frank. “The dining scene seems getting to oversupplied values, and determines to cool the market for a sustainable field may be required sooner rather than later,” states Ethan Hsu, head of retail at Knight Frank Singapore.
At the same time, the F&B scene has actually viewed an increased rate of dining establishments establishing and closing, incorporates the Knight Frank report. In 1Q2025, F&B brands consisting of Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao closed two sites.
Prime retail areas in the Marina Centre, City Hall and Bugis places averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents decreased 0.3% q-o-q to $24 psf pm. Suburban prime retail leas averaged $26.80 psf pm, up 0.3% q-o-q.
