Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024

The latest information shows that retail leas increased 0.6% q-o-q in 4Q2024, establishing on the quarterly rise of 0.3% recorded in 3Q2024.

On the other hand, Leonard Tay, head of study at Knight Frank Singapore, suggests that the relatively solid Singapore money and inflationary rate stress could stimulate lots of locals to reroute their retail costs overseas. “Prime retail rental growth for 2025 is anticipated to ease and secure within a predicted range of between 1% and 3%,” he claims.

Angelia Phua, consulting supervisor of research and consultancy, Singapore, at JLL, says that the latest leasing and cost data suggest that the recovery in the wider retail real estate industry is greatly on course in spite of recurring financial challenges such as usage leakage, the dampening results of cost inflation on consumption and cost stress encountered by retail operators.

She includes that new need for retail space was spearheaded by the entry of new-to-market brands and the development of occurring companies such as F&B, active lifestyle and sports, fashion labels, as well as beauty and wellness products.

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” Sellers remain to incorporate experiential elements right into their bricks-and-mortar shops, to improve the buying experience and drive customer engagement. Zara and Levi’s resumed at ION Orchard in 2024, with Zara launching express in-store pick-up and Levi’s introduced its first Dressmaker Outlet,” says Wong Xian Yang, head of research study Singapore & SEA at Cushman & Wakefield.

Rental development in Singapore’s retail real estate industry listed a yearly increase of 0.5% for the whole of 2024, according to real estate statistics released by URA on Jan 24. This notes the second constant year that the local retail market has actually seen leas grow, after raising 0.4% y-o-y in 2023.

Meanwhile, list prices dipped 1.3% q-o-q in 4Q2024, close to getting rid of the quarterly rise of 1.7% that was reported in 3Q2024. However, retail prices finished 2024 with a boost of 1.0% y-o-y contrasted to the 1.2% y-o-y increase marked in 2023.

Net retail demand in the Outside Central Region got to 560,000 sq ft in 2024, over four times the 129,000 sq ft in 2023, while net supply totalled 603,000 sq ft.

Looking in advance, the island-wide retail openings level is expected to stay tight this year, which must sustain rental development for prime retail spots, claims Phua. She includes that the marketplace will be buoyed by continual domestic usage, a tighter labour market, and a favorable tourism overview in 2025.

Furthermore, the island-wide vacancy rate in the retail property industry slipped 0.3% q-o-q to 6.2% in 4Q2024. This was greatly driven by declines in the opportunity rates in the Central Region (falling 0.4% q-o-q to 7.2%) and Outside Central Region (falling 0.3% q-o-q to 4.3%) last quarter.

Not only prime retail rooms in the Central Area have actually seen an uptick in need. Net retail interest in the Outside Central Area (OCR) was 560,000 sq ft last year, around 4 times the 129,000 sq ft taken up in 2023.

For example, French sports brand Salomon opened up outlets at Ngee Ann City and Orchard Central, while Finnish lifestyle brand name Marimekko opened its second outlet at Ngee Ann City after its 2023 launch at ION Orchard.

The descending fad in the island wide retail vacancy pace, which slipped for the third consecutive quarter, underpinned durable occupant need in the middle of a modest supply of retail space this year, states Phua.

Wong notes that openings rates in the OCR rose slightly to 4.3% in 4Q2024, up from 4.2% in 4Q2023 yet still below the pre-pandemic 6.2% in 4Q2019, which mirrors a tough suburban retail market. He includes: “Improved connectivity and diverse retail services, including life-style and eating alternatives, have enhanced suburban charm, bring in reputed overseas F&B companies. Japan’s Warabimochi Kamakura and Hong Kong’s Ging Sun Ho King of Bun have actually debuted at One Holland Village and Tampines Mall, specifically.”

“Rent growth ability, however, could be moderated by intake leak arising from outbound travel and the durability of the Singapore money, in addition to retailers’ level of sensitivity to lease hikes among a difficult and unsure operating setting,” states Phua. Based on JLL Research study’s retail property profile, she expects rents for prime flooring area of investment-grade retail assets to continue expanding by 1.5 to 2.5% y-o-y in 2025.