Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Knight Frank defines top retail places as rental-yielding units of 350 to 1,500 sq ft with the greatest frontage, connectivity, footfall and ease of access in a mall, such as ground- or basement-floor retail industry shopping mall units connected to an MRT station or bus interchange.
Singapore’s total retail sales (leaving out motor vehicles) fell from $3.5 billion in March to $3.3 billion in April, in tandem with the lesser visitor returns. Nonetheless, May observed a pick up to $3.6 billion, driven by food items and alcohol shopping. Retail activity turns up to have readjusted to maintainable status in 2Q2024, following the concert-heavy months in 1Q2024, notes Ethan Hsu, Knight Frank’s head of retail.
Information from the Bookkeeping and Corporate Regulatory Authority show that retail and F&B company cessations amounted to 2,631 in 2Q2024, going beyond the 2,502 organizations developed during the same duration. This is a reverse from the previous quarter when there was a net increase of 295 new retail and F&B business.
As of 1H2024, prime rents islandwide have increased 1.5%, assisted by the post-pandemic regeneration and new beginnings by local and international brands. This includes British footwear seller Hunter which started its very first outlet in Singapore at Plaza Singapura and French sportswear brand Hoka’s introduction in Ion Orchard. The F&B industry was signed up with by newcomers Ipoh Town, a Malaysian classic coffeehouse at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
Whilst the retail sector in Singapore remains attractive to retailers, Hsu notes that rising cost of living and a strong Singapore dollar have actually tempered development as stores deal with increasing operating costs.
Prime retail spots in the city-fringe observed the highest rentals growth in 2Q2024, climbing 1.3% q-o-q to $23.70 psf pm. Prime rental fees in suburbs climbed up 1.2% q-o-q to $26.50 psf pm, adhered to by the Marina Centre, City Hall and Bugis section (up 1% q-o-q to $25.50 psf pm) and the Orchard part (up 0.6% q-o-q to $30.70 psf pm).
In the middle of this unpredictable setting, Hsu believes prime retail rental development will likely be slow for the rest of the year, as rising prices could likely deter growth by merchants and urge incorporation as an alternative. Even so, he believes rental fees are still on the right track to grow between 2% and 4% for the entire year, unchanged from his earlier projections.
While Taylor Swift and Coldplay concert-goers enhanced visitors to a peak of almost 1.5 million in March, visitor arrivings stabilised last quarter, with 1.4 million visitors documented in April and 1.3 million tourists documented in May and June respectively.
The common prime retail leas islandwide expanded by 0.9% q-o-q and 3.8% y-o-y to get to $27.40 psf each month (psf pm) in 2Q2024, according to a July Knight Frank retail record. The development occurs in spite of lower traveler landings following a brief boom because of prominent performances in the first quarter of the year.
