Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
Angelia Phua, consulting director of research and consultancy, Singapore, at JLL, claims that the most recent rentals and rate data indicate that the healing in the more comprehensive retail property market is mostly on track regardless of continuous financial obstacles such as consumption leakage, the dampening results of price rising cost of living on usage and cost tensions faced by retail operators.
Not just prime retail areas in the Central Region have actually found an uptick in need. Net retail need in the Outside Main Region (OCR) was 560,000 sq ft past year, around 4 times the 129,000 sq ft consumed in 2023.
Looking in advance, the island-wide retail openings rate is anticipated to continue to be tight this year, which ought to sustain rental growth for prime retail spots, says Phua. She includes that the marketplace will be buoyed by sustained domestic consumption, a tighter labour market, and a positive tourism expectation in 2025.
Rental development in Singapore’s retail real estate market recorded a yearly surge of 0.5% for the entire of 2024, according to realty statistics released by URA on Jan 24. This marks the 2nd constant year that the regional retail market has seen rental fees improve, after raising 0.4% y-o-y in 2023.
Moreover, the island-wide openings rate in the retail real estate industry slipped 0.3% q-o-q to 6.2% in 4Q2024. This was greatly steered by declines in the opportunity rates in the Central Area (dropping 0.4% q-o-q to 7.2%) and Outside Central Region (falling 0.3% q-o-q to 4.3%) previous quarter.
Wong notes that openings rates in the OCR increased somewhat to 4.3% in 4Q2024, up from 4.2% in 4Q2023 however still lesser the pre-pandemic 6.2% in 4Q2019, that mirrors a resilient suburban retail market. He adds: “Boosted connection and diverse retail services, including life-style and dining alternatives, have actually boosted rural appeal, bring in well-known 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, specifically.”
As an example, French sports brand name Salomon opened outlets at Ngee Ann City and Orchard Central, while Finnish lifestyle company Marimekko started its 2nd outlet at Ngee Ann City after its 2023 launch at ION Orchard.
” Retailers remain to include experiential elements right into their bricks-and-mortar establishments, to improve the purchasing experience and drive consumer activity. Zara and Levi’s resumed at ION Orchard in 2024, with Zara releasing express in-store pick-up and Levi’s introduced its initial Dressmaker Store,” states Wong Xian Yang, head of research Singapore & SEA at Cushman & Wakefield.
On the other hand, Leonard Tay, head of research at Knight Frank Singapore, opines that the fairly solid Singapore dollar and inflationary rate pressures could spur numerous citizens to redirect their retail investing overseas. “Prime retail rental development for 2025 is anticipated to reduce and secure within a forecasted range of in between 1% and 3%,” he says.
“Rental fee growth ability, however, could be regulated by intake leak arising from outgoing travel and the durability of the Singapore money, in addition to merchants’ sensitivity to rent hikes among a difficult and unsure operating environment,” states Phua. Based Upon JLL Study’s retail asset profile, she anticipates rental fees for prime flooring space of investment-grade retail assets to continue growing by 1.5 to 2.5% y-o-y in 2025.
The most recent data shows that retail leas raised 0.6% q-o-q in 4Q2024, building on the quarterly rise of 0.3% documented in 3Q2024.
On the other hand, retail prices dipped 1.3% q-o-q in 4Q2024, close to removing the quarterly raise of 1.7% that was documented 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 4 times the 129,000 sq ft in 2023, while net supply amounted to 603,000 sq ft.
The descending fad in the island wide retail vacancy pace, which slipped for the third consecutive quarter, underpinned resistant occupier need in the middle of a moderate supply of retail space this year, claims Phua.
She includes that brand-new interest for retail space was spearheaded by the entry of new-to-market companies and the growth of occurring brands such as F&B, active lifestyle and sports, fashion companies, in addition to beauty and wellness brands.