Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Singapore prime retail rentals stayed mainly apartments in 1Q2025 amidst a retail setting that remains to deal with increasing operating expense and labour restraints, says Knight Frank Singapore. According to a research report posted by the firm in April, prime retail rents in Orchard equated at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
The quick entries and exits of F&B brands can point to an indicator of over growing and the need for intervention to secure the market, says Knight Frank. “The dining scene seems reaching oversupplied values, and determines to cool down the marketplace for a sustainable field might be needed earlier rather than later,” says Ethan Hsu, head of retail at Knight Frank Singapore.
Prime retail spaces in the Marina Centre, City Hall and Bugis areas averaged at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents fell 0.3% q-o-q to $24 psf pm. Suburban prime retail rents averaged $26.80 psf pm, up 0.3% q-o-q.
Pointing out information from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that a total amount of 3,047 F&B businesses shut down in 2024– the top number since 2005. On the other hand, 3,793 F&B businesses were formed the same year, the second-highest number ever since 3,934 openings in 2021.
Offered the consistent high-cost environment and the considerably affordable F&B scene, the outlook for the retail stays difficult, says Knight Frank. In addition, sweeping tariffs announced by United States Head of state Donald Trump can pull down business view. “For a small trading state like Singapore, this may have far-ranging impacts that could weaken [Knight Frank’s] delicate 1% to 3% development forecast of prime retail rental fees in 2025,” says Hsu.
Simultaneously, the F&B scene has seen a sped up speed of eateries setting up and shutting down, incorporates the Knight Frank information. In 1Q2025, F&B brands including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, whilst hotpot chain Haidilao closed 2 sites.
The commonly stagnant rents follow mixed retail sales performance in 1Q2024. Whilst information from the Singapore Department of Statistics revealed retail sales leaving out motor vehicles rebounding from a year-end depression to strike $4 billion in January on the back of Chinese New Year festivities, it consequently slipped to $3.2 billion in February before climbing back up to $4.2 billion in March.
Possible steps include restricting the number of F&B licences released within a particular place, capping the percentage of net lettable area allocated for F&B in a mall to a stakeholder-reviewed proportion, or enforcing a tax obligation on F&B chains that expand past a particular number of avenues within a designated period. “These can all function as a call for F&B drivers not to bite off more than they can eat and expand the growth of F&B to a more fair and lasting pace,” adds Hsu.
