Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Singapore’s overall retail sales (excluding motor vehicles) dropped from $3.5 billion in March to $3.3 billion in April, in tandem with the lesser tourist arrivals. Still, May observed a pick up to $3.6 billion, steered by food and liquor spending. Retail action appears to have adjusted to sustainable levels in 2Q2024, following the concert-heavy months in 1Q2024, notes Ethan Hsu, Knight Frank’s head of retail.
Prime retail spots in the city-fringe saw the highest possible leasing improvement in 2Q2024, rising 1.3% q-o-q to $23.70 psf pm. Prime rental fees in suburban areas ascended 1.2% q-o-q to $26.50 psf pm, complied with by the Marina Centre, City Hall and Bugis place (up 1% q-o-q to $25.50 psf pm) and the Orchard area (up 0.6% q-o-q to $30.70 psf pm).
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Amid this unpredictable setting, Hsu thinks prime retail rental growth will likely be slow for the rest of the year, as rising prices could likely prevent development by stores and oblige incorporation as an alternative. Nevertheless, he thinks rents are still on track to grow between 2% and 4% for the whole year, unmodified from his earlier estimates.
Whilst the retail industry sector in Singapore remains attractive to retailers, Hsu notes that rising cost of living and a good Singapore dollar have tempered growth as retailers face ascending operating costs.
As of 1H2024, prime leas islandwide have actually grown 1.5%, assisted by the post-pandemic regeneration and new beginnings by local and international brands. This includes British footwear merchant Hunter which opened its 1st outlet in Singapore at Plaza Singapura and French sports apparel company Hoka’s opening in Ion Orchard. The F&B market was joined by beginners Ipoh Town, a Malaysian classic coffeehouse at Jewel Changi Airport; and Kebuke, a Taiwanese bubble tea establishment at Taste Orchard.
The common prime retail rentals islandwide expanded by 0.9% q-o-q and 3.8% y-o-y to reach $27.40 psf monthly (psf pm) in 2Q2024, according to a July Knight Frank retail record. The progress happens in spite of reduced tourist appearances adhering to a temporary boom because of high-profile performances in the very first quarter of the year.
Data from the Accountancy and Corporate Regulatory Authority reveal that retail and F&B company cessations amounted to 2,631 in 2Q2024, surpassing the 2,502 companies created throughout the same duration. This is a reverse from the last quarter when there was a net increase of 295 brand-new retail and F&B ventures.
While Taylor Swift and Coldplay concert-goers boosted site visitors to a spike of close to 1.5 million in March, tourist arrivals secured last quarter, with 1.4 million guests reported in April and 1.3 million visitors logged in May and June specifically.
Knight Frank defines top retail spots as rental-yielding units of 350 to 1,500 sq ft with the best frontage, connectivity, footfall and access in a shopping center, such as ground- or basement-floor retail shopping mall units connected to an MRT station or bus interchange.
