Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
Net retail interest in the Outside Central Region reached 560,000 sq ft in 2024, over 4 times the 129,000 sq ft in 2023, while net supply completed 603,000 sq ft.
” Retailers remain to integrate experiential components into their bricks-and-mortar establishments, to boost the purchasing experience and drive client involvement. Zara and Levi’s resumed at ION Orchard in 2024, with Zara launching express in-store pick-up and Levi’s introduced its initial Tailor Outlet,” claims Wong Xian Yang, head of research Singapore & SEA at Cushman & Wakefield.
Rental growth in Singapore’s retail property industry registered an annual surge of 0.5% for the entire of 2024, according to property statistics published by URA on Jan 24. This notes the second constant year that the local retail market has observed rental fees grow, after increasing 0.4% y-o-y in 2023.
Not just prime retail rooms in the Central Area have found an uptick in demand. Net retail demand in the Outside Central Area (OCR) was 560,000 sq ft last year, about four times the 129,000 sq ft consumed in 2023.
She adds that brand-new interest for retail space was spearheaded by the entrance of new-to-market brands and the development of occurring brands such as F&B, active lifestyle and sports, fashion labels, as well as beauty and wellness brands.
Looking ahead, the island-wide retail openings level is expected to stay limited this year, which should sustain rental growth for prime retail spaces, states Phua. She includes that the market will be buoyed by sustained domestic intake, a tighter labour market, and a favorable tourism outlook in 2025.
On the other hand, Leonard Tay, head of study at Knight Frank Singapore, says that the relatively strong Singapore money and inflationary cost pressures can spur lots of locals to redirect their retail investing offshore. “Prime retail rental development for 2025 is anticipated to reduce and secure within a forecasted range of between 1% and 3%,” he states.
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Angelia Phua, consulting director of research study and consultancy, Singapore, at JLL, states that the most recent rentals and rate stats show that the recuperation in the broader retail property industry is mostly on track regardless of ongoing financial obstacles such as consumption leakage, the dampening results of cost rising cost of living on intake and expense tensions encountered by retail operators.
The downward fad in the island wide retail vacancy pace, which slid for the third sequent quarter, underpinned resilient occupant demand amid a moderate supply of retail room this year, claims Phua.
Wong indicates that openings rates in the OCR rose slightly to 4.3% in 4Q2024, ascend from 4.2% in 4Q2023 however still below the pre-pandemic 6.2% in 4Q2019, that shows a resilient suburban retail market. He includes: “Improved connection and diverse retail services, including life-style and eating options, have actually enhanced country charm, attracting reputed overseas F&B companies. Japan’s Warabimochi Kamakura and Hong Kong’s Ging Sun Ho King of Bun have debuted at One Holland Village and Tampines Mall, respectively.”
Furthermore, the island-wide vacancy rate in the retail real estate market slipped 0.3% q-o-q to 6.2% in 4Q2024. This was mostly driven by reductions in the vacancy rates in the Central Area (falling 0.4% q-o-q to 7.2%) and Outside Central Region (dropping 0.3% q-o-q to 4.3%) last quarter.
For example, French sports brand name Salomon opened outlets at Ngee Ann City and Orchard Central, while Finnish lifestyle brand name Marimekko started its second site at Ngee Ann City after its 2023 launch at ION Orchard.
The most up to date information indicates that retail leas raised 0.6% q-o-q in 4Q2024, establishing on the quarterly increase of 0.3% documented in 3Q2024.
On the other hand, list prices dipped 1.3% q-o-q in 4Q2024, nearly removing the quarterly rise of 1.7% that was documented in 3Q2024. Nevertheless, retail prices finished 2024 with a boost of 1.0% y-o-y contrasted to the 1.2% y-o-y surge notched in 2023.
“Rent development ability, however, could be moderated by usage leakage arising from outgoing travel and the durability of the Singapore money, as well as retailers’ level of sensitivity to lease hikes in the middle of a challenging and unpredictable operating environment,” claims Phua. Based on JLL Research study’s retail property portfolio, she anticipates rents for prime floor area of investment-grade retail assets to continue growing by 1.5 to 2.5% y-o-y in 2025.