Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Knight Frank defines top retail spaces as rental-yielding units of 350 to 1,500 sq ft with the best frontage, online connectivity, footfall and ease of access in a shopping center, such as ground- or basement-floor retail shopping mall units connected to an MRT station or bus interchange.
While the retail market in Singapore continues to be appealing to retailers, Hsu notes that rising cost of living and a solid Singapore dollar have actually solidified growth as retailers deal with rising operating costs.
Singapore’s total retail sales (excluding motor vehicles) fell from $3.5 billion in March to $3.3 billion in April, in tandem with the reduced tourist arrivals. Nonetheless, May saw a pick up to $3.6 billion, driven by food items and alcohol expenditures. Retail action shows up to have actually readjusted to safe status in 2Q2024, following the concert-heavy months in 1Q2024, mentions Ethan Hsu, Knight Frank’s head of retail.
As of 1H2024, prime rents islandwide have actually expanded 1.5%, assisted by the post-pandemic revival and new openings by local and foreign companies. This includes British footwear store Hunter which launched its first shop in Singapore at Plaza Singapura and French sports apparel company Hoka’s opening in Ion Orchard. The F&B field was joined by newcomers Ipoh Town, a Malaysian old-fashioned coffee bar at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
The average prime retail leas islandwide grew by 0.9% q-o-q and 3.8% y-o-y to reach $27.40 psf each month (psf pm) in 2Q2024, according to a July Knight Frank retail record. The development happens despite lesser tourist landings following a short-lived boost as a result of top-level performances in the very first quarter of the year.
Prime retail places in the city-fringe viewed the top leasing buildup in 2Q2024, climbing 1.3% q-o-q to $23.70 psf pm. Prime leas in suburbs climbed up 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).
While Taylor Swift and Coldplay concert-goers enhanced visitors to a point of nearly 1.5 million in March, traveller arrivings stabilised last quarter, with 1.4 million visitors reported in April and 1.3 million tourists logged in May and June respectively.
In the middle of this unclear atmosphere, Hsu believes prime retail rental development will likely be slower for the remainder of the year, as rising expenses might possibly discourage growth by merchants and urge consolidation as an alternative. Nonetheless, he thinks rental fees are still on course to grow in between 2% and 4% for the whole year, the same from his earlier estimates.
Information from the Bookkeeping and Corporate Regulatory Authority reveal that retail and F&B company cessations amounted to 2,631 in 2Q2024, surpassing the 2,502 businesses created during the exact same period. This is a reverse from the previous quarter when there was a net increase of 295 new retail and F&B enterprises.
