Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Knight Frank specifies top retail spaces as rental-yielding units of 350 to 1,500 sq ft with the greatest frontage, connectivity, footfall and access in a shopping mall, just like ground- or basement-floor retail industry shopping center units connected to an MRT terminal or bus interchange.
Data from the Bookkeeping and Corporate Regulatory Authority reveal that retail and F&B business cessations completed 2,631 in 2Q2024, exceeding the 2,502 companies created throughout the exact same duration. This is a turn around from the past quarter when there was a net increase of 295 brand-new retail and F&B ventures.
Singapore’s total retail sales (leaving out motor vehicles) fell from $3.5 billion in March to $3.3 billion in April, in tandem with the reduced foreigner returns. Nonetheless, May saw a bounce back to $3.6 billion, driven by food items and liquor expenditures. Retail action shows up to have readjusted to maintainable levels in 2Q2024, following the concert-heavy months in 1Q2024, indicates Ethan Hsu, Knight Frank’s head of retail.
The average prime retail rentals islandwide expanded by 0.9% q-o-q and 3.8% y-o-y to hit $27.40 psf each month (psf pm) in 2Q2024, according to a July Knight Frank retail report. The growth happens despite lesser tourist appearances following a short-lived boost due to prominent concerts in the very first quarter of the year.
Prime retail sectors in the city-fringe viewed the highest leasing buildup in 2Q2024, climbing 1.3% q-o-q to $23.70 psf pm. Prime rental fees in suburban areas climbed 1.2% q-o-q to $26.50 psf pm, complied with by the Marina Centre, City Hall and Bugis section (up 1% q-o-q to $25.50 psf pm) and the Orchard part (up 0.6% q-o-q to $30.70 psf pm).
Amidst this unsure environment, Hsu thinks prime retail rental progression will likely be sluggish for the rest of the year, as rising costs might likely hinder growth by merchants and compel incorporation as an alternative. Nevertheless, he thinks leas are still on track to expand between 2% and 4% for the entire year, unmodified from his earlier estimates.
As of 1H2024, prime leas islandwide have increased 1.5%, assisted by the post-pandemic revival and new launchings by local and foreign companies. This consists of British footwear store Hunter which began its first establishment in Singapore at Plaza Singapura and French sportswear brand Hoka’s beginning in Ion Orchard. The F&B industry was signed up with by startups Ipoh Town, a Malaysian classic coffee shop at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea establishment at Taste Orchard.
While the retail store sector in Singapore stays appealing to retailers, Hsu notes that inflation and a strong Singapore money have tempered development as retailers face increasing operating expense.
While Taylor Swift and Coldplay concert-goers enhanced visitors to a spike of almost 1.5 million in March, tourist arrivals secured last quarter, with 1.4 million tourists recorded in April and 1.3 million visitors reported in May and June respectively.
