Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Prime retail spaces in the city-fringe viewed the highest possible rentals buildup in 2Q2024, rising 1.3% q-o-q to $23.70 psf pm. Prime rental fees in suburban areas went up 1.2% q-o-q to $26.50 psf pm, followed by the Marina Centre, City Hall and Bugis part (up 1% q-o-q to $25.50 psf pm) and the Orchard area (up 0.6% q-o-q to $30.70 psf pm).
Since 1H2024, prime rents islandwide have grown 1.5%, assisted by the post-pandemic regeneration and new openings by local and foreign companies. This includes British shoes merchant Hunter that began its first outlet in Singapore at Plaza Singapura and French sportswear brand name Hoka’s opening in Ion Orchard. The F&B field was joined by newcomers Ipoh Town, a Malaysian classic coffee shop at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
Amidst this unpredictable atmosphere, Hsu thinks prime retail rental growth will likely be slower for the rest of the year, as climbing costs can potentially deter expansion by retailers and force consolidation as an alternative. Nevertheless, he believes leas are still on course to grow in between 2% and 4% for the entire year, unchanged from his earlier projections.
Knight Frank specifies top retail locations as rental-yielding units of 350 to 1,500 sq ft with the best front view, connectivity, footfall and ease of access in a shopping center, like ground- or basement-floor retail industry mall units connected to an MRT station or bus interchange.
While the retail market in Singapore remains appealing to retailers, Hsu notes that inflation and a solid Singapore dollar have actually tempered development as stores deal with rising operating costs.
Information from the Bookkeeping and Corporate Regulatory Authority reveal that retail and F&B service cessations amounted to 2,631 in 2Q2024, surpassing the 2,502 services formed throughout the same period. This is a reverse from the past quarter when there was a net rise of 295 new retail and F&B enterprises.
The standard prime retail rents islandwide expanded by 0.9% q-o-q and 3.8% y-o-y to hit $27.40 psf monthly (psf pm) in 2Q2024, according to a July Knight Frank retail record. The growth comes despite lower tourist appearances complying with a brief boost as a result of high-profile concerts in the very first quarter of the year.
Singapore’s overall retail sales (excluding motor vehicles) fell from $3.5 billion in March to $3.3 billion in April, in tandem with the reduced tourist arrivals. Nonetheless, May observed a rebound to $3.6 billion, driven by food items and alcohol spending. Retail action shows up to have altered to safe levels in 2Q2024, mirroring the concert-heavy months in 1Q2024, mentions Ethan Hsu, Knight Frank’s head of retail.
While Taylor Swift and Coldplay concert-goers improved visitors to a spike of close to 1.5 million in March, tourist arrivals stabilised last quarter, with 1.4 million guests reported in April and 1.3 million visitors documented in May and June respectively.
