Prime Retail Rents Orchard Road Rise 41 2023 Eighth Highest Globally Savills
Savills’ global luxury retail market report has revealed a positive trend in Singapore’s prime retail sector, particularly on Orchard Road, one of the city-state’s most popular shopping destinations. In the report, Singapore’s prime retail rents on Orchard Road were one of eight international luxury retail locations that experienced an increase in headline prime rents in 2023.
The consultancy recorded a 4.1% increase in headline prime rents along Orchard Road, ranking it in eighth place among the other luxury retail locations that saw increases in prime retail rents. At the top of the chart was Toronto’s Bloor Street, where prime retail rents surged 16% last year, followed by New York’s Madison Avenue which increased by 9.5%.
Aside from Singapore, other cities that recorded an increase in prime retail rents were Amsterdam’s PC Hooftstraat, Milan’s V Monte Napoleone, Madrid’s Ortega y Gasset, Hong Kong’s Canton Road (4.3%), and Berlin’s Kurfürstendamm. According to Marie Hickey, director of commercial research at Savills, these locations were buoyed by a reduced availability of luxury retail spaces and improved occupier demand.
However, Hickey notes that prime rents in some core luxury destinations are still below pre-pandemic levels, particularly in large and higher-value markets such as Singapore, New York, Hong Kong, and London. In fact, Savills’ research shows that prime retail rents in Singapore in 4Q2023 were still 23% lower compared to 4Q2019 before the pandemic.
Nevertheless, Hickey believes that this difference continues to support leasing appetite, as long as the quality of space and market dynamics are satisfactory. She also adds that the rental value spread is slowly diminishing and may put further upward pressure on rents across various locations in 2024.
Hickey also observed a trend among luxury brands to “shed marginal stores and upsize their best ones.” She says that many single-storied shops are now moving to duplexes, often with a triplex façade, to ensure that top luxury brands stand out to their customers. This is evident on Hong Kong’s Canton Road, where a wall of branded luxury facades lines the Harbour City side of the street. In Singapore, Marina Bay Sands also showcases this trend.
Located in Woodlands, North Plaza is a charming shopping destination that caters to the needs of its local residents. This intimate mall offers a personal touch and boasts a variety of food options, grocery stores, and service shops. It is most well-known for its wet market and food center, where visitors can find fresh produce and delicious hawker fare. The plaza’s compact size makes it a convenient and popular choice for essential shopping and quick errands. And with the newly constructed Norwood Grand CDL right next door, the community now has even more convenience and accessibility at their fingertips. Norwood Grand CDL naturally complements this bustling hub, enhancing the overall shopping experience.
According to Sulian Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore, the city-state boasts a considerable number of affluent consumers. Tan-Wijaya notes that the limited availability of real estate for luxury stores, and not the shortage of big spenders, may be the main constraint to new luxury store openings in Singapore.
She also comments on the strong interest among luxury watch and jewelry brands to expand in Singapore, with new standalone experiential concepts catering to their top-tier customers. However, there are only a few high-end malls in Singapore, which means some brands may have to wait for years before they can get into their preferred location because incumbent big brands do not want to move out.