Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
Angelia Phua, consulting supervisor of research and consultancy, Singapore, at JLL, claims that the most recent rental and price data show that the recovery in the wider retail property market is mainly on course despite ongoing financial difficulties such as usage leakage, the dampening results of price rising cost of living on usage and cost pressures dealt with by retail operators.
Looking ahead, the island-wide retail vacancy rate is anticipated to remain limited this year, which need to sustain rental growth for prime retail spaces, claims Phua. She adds that the market will be buoyed by sustained domestic intake, a tighter labour market, and a favorable tourism expectation in 2025.
“Rental fee development ability, however, could be moderated by usage leak emerging from outgoing travel and the strength of the Singapore money, along with sellers’ level of sensitivity to rent out hikes amidst a difficult and unsure operating atmosphere,” says Phua. Based on JLL Research study’s retail asset profile, she expects rents for prime flooring room of investment-grade retail assets to proceed growing by 1.5 to 2.5% y-o-y in 2025.
On the other hand, Leonard Tay, head of research at Knight Frank Singapore, believes that the relatively strong Singapore money and inflationary price pressures can spur lots of locals to reroute their retail costs offshore. “Prime retail rental development for 2025 is expected to ease and secure within a projected range of between 1% and 3%,” he says.
The down trend in the island wide retail vacancy pace, which slid for the third consecutive quarter, underpinned resilient occupier demand amidst a modest supply of retail room this year, states Phua.
Not only prime retail areas in the Central Area have actually seen an uptick in demand. Net retail interest in the Outside Central Area (OCR) was 560,000 sq ft last year, approximately four times the 129,000 sq ft absorbed in 2023.
” Retailers continue to integrate experiential elements right into their bricks-and-mortar establishments, to enhance the shopping experience and drive customer involvement. Zara and Levi’s reopened at ION Orchard in 2024, with Zara releasing express in-store pick-up and Levi’s unveiled its first Dressmaker Shop,” says Wong Xian Yang, head of study Singapore & SEA at Cushman & Wakefield.
In addition, the island-wide openings level in the retail real estate market slid 0.3% q-o-q to 6.2% in 4Q2024. This was greatly driven by reductions in the opportunity rates in the Central Region (falling 0.4% q-o-q to 7.2%) and Outside Central Region (slipping 0.3% q-o-q to 4.3%) previous quarter.
Net retail demand in the Outside Central Region reached 560,000 sq ft in 2024, over four times the 129,000 sq ft in 2023, while net supply amounted to 603,000 sq ft.
The most up to date data suggests that retail rentals increased 0.6% q-o-q in 4Q2024, establishing on the quarterly rise of 0.3% captured in 3Q2024.
For example, French sports brand Salomon opened avenues at Ngee Ann City and Orchard Central, while Finnish lifestyle company Marimekko opened its 2nd site at Ngee Ann City after its 2023 launch at ION Orchard.
She includes that new demand for retail room was spearheaded by the entry of new-to-market companies and the development of occurring companies such as F&B, active lifestyle and sports, fashion labels, as well as beauty and wellness products.
Meanwhile, list prices dipped 1.3% q-o-q in 4Q2024, nearly erasing the quarterly increase of 1.7% that was reported in 3Q2024. Nevertheless, retail prices finished 2024 with a boost of 1.0% y-o-y compared to the 1.2% y-o-y surge marked in 2023.
Wong indicates that openings rates in the OCR climbed somewhat to 4.3% in 4Q2024, ascend from 4.2% in 4Q2023 yet still below the pre-pandemic 6.2% in 4Q2019, that reflects a tough suburban retail market. He adds: “Boosted connectivity and diversified retail offerings, including life-style and eating alternatives, have boosted country charm, bring in well-known overseas F&B labels. Japan’s Warabimochi Kamakura and Hong Kong’s Ging Sun Ho King of Bun have debuted at One Holland Village and Tampines Mall, respectively.”
Rental development in Singapore’s retail real estate industry recorded an annual increase of 0.5% for the whole of 2024, according to realty statistics released by URA on Jan 24. This marks the second succeeding year that the local retail market has actually observed rents improve, after increasing 0.4% y-o-y in 2023.
