Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Singapore’s overall retail sales (omitting motor vehicles) fell from $3.5 billion in March to $3.3 billion in April, in tandem with the reduced visitor arrivals. Nonetheless, May saw a bounce back to $3.6 billion, steered by food and liquor expenditures. Retail action shows up to have actually readjusted to sustainable ranks in 2Q2024, mirroring the concert-heavy months in 1Q2024, notes Ethan Hsu, Knight Frank’s head of retail.
Prime retail sectors in the city-fringe saw the highest leasing growth in 2Q2024, climbing 1.3% q-o-q to $23.70 psf pm. Prime rents in suburban areas ascended 1.2% q-o-q to $26.50 psf pm, followed by the Marina Centre, City Hall and Bugis area (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).
Knight Frank defines prime retail spaces as rental-yielding units of 350 to 1,500 sq ft with the most ideal frontage, connectivity, footfall and accessibility in a shopping mall, like ground- or basement-floor retail industry shopping center units connected to an MRT station or bus interchange.
The standard prime retail leas islandwide expanded by 0.9% q-o-q and 3.8% y-o-y to get to $27.40 psf per month (psf pm) in 2Q2024, according to a July Knight Frank retail record. The development happens regardless of lower vacationer arrivals following a short-lived boost because of prominent shows in the very first quarter of the year.
While Taylor Swift and Coldplay concert-goers enhanced visitors to a point of close to 1.5 million in March, visitor arrivals stabilised last quarter, with 1.4 million tourists recorded in April and 1.3 million guests recorded in May and June specifically.
In the middle of this unclear setting, Hsu believes prime retail rental development will likely be weaker for the rest of the year, as rising expenses might likely discourage expansion by merchants and compel incorporation as an alternative. Even so, he thinks rental fees are still on the right track to expand between 2% and 4% for the whole year, the same from his earlier estimates.
While the retail sector in Singapore remains appealing to retailers, Hsu notes that rising cost of living and a good Singapore dollar have actually tempered growth as stores deal with increasing operating expense.
Information from the Accounting and Corporate Regulatory Authority show that retail and F&B service cessations completed 2,631 in 2Q2024, surpassing the 2,502 organizations formed throughout the very same period. This is a switch from the past quarter when there was a net rise of 295 new retail and F&B enterprises.
As of 1H2024, prime rents islandwide have grown 1.5%, assisted by the post-pandemic revival and new launchings by local and international brand names. This consists of British footwear merchant Hunter which began its very first establishment in Singapore at Plaza Singapura and French activewear company Hoka’s opening in Ion Orchard. The F&B market was joined by starters Ipoh Town, a Malaysian classic coffee shop at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
