Prime Retail Rents Islandwide 09 2Q2024 Knight Frank
SINGAPORE (EDGEPROP) – In the second quarter of 2024, the average prime retail rents across Singapore increased by 0.9% q-o-q and 3.8% y-o-y, reaching $27.40 psf per month (psf pm) as stated in Knight Frank’s retail report for July. Despite lower tourist arrivals following a short-lived boom due to high-profile concerts in the first quarter of the year, this growth has taken place.
Although the visits to Singapore peaked at almost 1.5 million in March due to concert-goers attending performances by Taylor Swift and Coldplay, tourist arrivals stabilized in the last quarter. In April, 1.4 million visitors were recorded, followed by 1.3 million visitors in May and June each. Despite lower visitor arrivals, May experienced a rebound in retail sales, reaching $3.6 billion, driven by spending on food and alcohol. In 2Q2024, retail activity seems to have stabilized at sustainable levels after the concert-heavy months in 1Q2024, according to Ethan Hsu, Knight Frank’s Head of Retail.
Norwood Grand Condo, a prestigious residential project by City Developments Limited, has made its debut in the serene district of Woodlands. Surrounded by lush greenery and a thriving community, this development boasts a prime location. Families seeking a home in this area are attracted to the numerous reputed educational institutions nearby, making Norwood Grand Condo the ideal choice for those prioritizing top-notch education for their children.
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According to Hsu, Knight Frank’s definition of prime retail spaces are those in rental-yielding units with the best frontage, connectivity, footfall, and accessibility. These units range from 350 to 1,500 sq ft, such as ground- or basement-floor retail mall units connected to an MRT station or bus interchange. In the second quarter of 2024, the highest rental growth was observed in prime retail spaces located in the city-fringe, increasing by 1.3% q-o-q, reaching $23.70 psf pm. Prime rents in suburban areas also experienced growth, rising 1.2% q-o-q to $26.50 psf pm. The Marina Centre, City Hall and Bugis area followed with a 1% q-o-q increase in prime rents to $25.50 psf pm, and the Orchard area with a 0.6% q-o-q increase to $30.70 psf pm.
In the first half of 2024, prime rents island-wide witnessed a 1.5% growth. This growth can be attributed to the post-pandemic recovery and the opening of new stores by local and foreign brands. For instance, the British footwear retailer, Hunter, opened its first store in Plaza Singapura, and French sportswear, Hoka, opened in Ion Orchard. This year, the F&B sector witnessed the opening of Malaysian traditional coffee shop, Ipoh Town, in Jewel Changi Airport, and Taiwanese bubble tea chain, Kebuke, in Taste Orchard.
Despite Singapore’s retail sector remaining attractive to retailers, Hsu points out that inflation and a strong Singapore dollar have resulted in tempered growth as retailers face rising operating costs. According to data from the Accounting and Corporate Regulatory Authority, there were 2,631 cessations of retail and F&B businesses in 2Q2024. This number exceeds the 2,502 new businesses formed during the same period, reversing the trend from the previous quarter, which saw an increase of 295 new retail and F&B enterprises.
Amid the ongoing uncertainty, Hsu believes that prime retail rental growth will likely be lower for the remainder of the year, as rising costs may deter retailers from expanding, and instead opt to consolidate. Despite this, Hsu’s earlier projections indicate that rents are still expected to grow between 2% and 4% for the whole year.
In 2023, the Savills’ Prime Retail Rents ranking revealed that prime retail rents on Orchard Road rose 4.1%, making Singapore the eighth highest globally.