Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
The standard prime retail rents islandwide grew 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 report. The growth happens in spite of reduced traveler arrivals adhering to a temporary boost as a result of top-level concerts in the first quarter of the year.
Singapore’s total retail sales (omitting motor vehicles) dropped from $3.5 billion in March to $3.3 billion in April, in tandem with the lower tourist arrivals. Still, May observed a bounce back to $3.6 billion, generated by food items and liquor spending. Retail activity seems to have readjusted to safe levels in 2Q2024, mirroring the concert-heavy months in 1Q2024, indicates Ethan Hsu, Knight Frank’s head of retail.
Prime retail spaces in the city-fringe saw the highest leasing improvement in 2Q2024, climbing 1.3% q-o-q to $23.70 psf pm. Prime leas 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 place (up 0.6% q-o-q to $30.70 psf pm).
Amidst this unclear setting, Hsu thinks prime retail rental growth will likely be weaker for the rest of the year, as rising expenses could possibly prevent development by stores and compel consolidation instead. Nevertheless, he believes rents are still on track to grow between 2% and 4% for the whole year, the same from his earlier projections.
While Taylor Swift and Coldplay concert-goers increased site visitors to a spike of close to 1.5 million in March, visitor arrivals secured last quarter, with 1.4 million tourists recorded in April and 1.3 million visitors reported 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, online connectivity, footfall and ease of access in a shopping center, just like ground- or basement-floor retail industry shopping center units connected to an MRT terminal or bus interchange.
Whilst the retail store industry in Singapore stays appealing to retailers, Hsu notes that rising cost of living and a strong Singapore dollar have actually tempered growth as sellers face increasing operating expense.
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Data from the Accounting and Corporate Regulatory Authority show that retail and F&B business cessations totalled 2,631 in 2Q2024, surpassing the 2,502 services formed during the very same period. This is a reverse from the previous quarter when there was a net boost of 295 new retail and F&B business.
Since 1H2024, prime rents islandwide have expanded 1.5%, supported by the post-pandemic regeneration and new openings by local and international companies. This consists of British shoes store Hunter that started its 1st store in Singapore at Plaza Singapura and French sports apparel company Hoka’s introduction in Ion Orchard. The F&B sector was signed up with by newcomers Ipoh Town, a Malaysian classic coffeehouse at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
