Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
The downward fad in the island wide retail vacancy rate, which slipped for the 3rd successive quarter, underpinned resistant tenant need amidst a modest supply of retail space this year, claims Phua.
” Stores remain to integrate experiential components into their bricks-and-mortar establishments, to improve the purchasing experience and drive client activity. Zara and Levi’s reopened at ION Orchard in 2024, with Zara releasing express in-store pick-up and Levi’s unveiled its initial Dressmaker Shop,” says Wong Xian Yang, head of study Singapore & SEA at Cushman & Wakefield.
For example, French sports brand Salomon opened up channels at Ngee Ann City and Orchard Central, while Finnish lifestyle brand Marimekko started its 2nd site at Ngee Ann City after its 2023 debut at ION Orchard.
On the other hand, Leonard Tay, head of research at Knight Frank Singapore, suggests that the reasonably strong Singapore dollar and inflationary rate pressures could spur several citizens to redirect their retail investing abroad. “Prime retail rental growth for 2025 is expected to reduce and secure within a projected range of in between 1% and 3%,” he states.
Not just prime retail areas in the Central Region have viewed an uptick in need. Net retail demand in the Outside Main Area (OCR) was 560,000 sq ft last year, approximately four times the 129,000 sq ft absorbed in 2023.
Rental development in Singapore’s retail real estate sector registered a yearly surge of 0.5% for the whole of 2024, according to property statistics published by URA on Jan 24. This marks the second constant year that the regional retail market has actually observed rents improve, after raising 0.4% y-o-y in 2023.
The latest data indicates that retail leas improved 0.6% q-o-q in 4Q2024, building on the quarterly rise of 0.3% documented in 3Q2024.
Wong mentions that vacancy rates in the OCR climbed somewhat to 4.3% in 4Q2024, ascend from 4.2% in 4Q2023 but still below the pre-pandemic 6.2% in 4Q2019, which reflects a resilient suburban retail market. He includes: “Enhanced connectivity and diversified retail offerings, consisting of life-style and eating choices, have boosted rural appeal, bring in respected overseas F&B labels. 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.”
Net retail interest 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 totalled 603,000 sq ft.
“Rental fee development possibility, however, could be regulated by intake leak emerging from outgoing travel and the durability of the Singapore dollar, along with merchants’ sensitivity to rent out hikes among a tough and uncertain operating atmosphere,” states Phua. Based Upon JLL Research study’s retail asset portfolio, she expects leas for prime flooring room of investment-grade retail assets to proceed growing by 1.5 to 2.5% y-o-y in 2025.
She adds that new demand for retail area was headed by the entrance of new-to-market labels and the development of existing brands such as F&B, active lifestyle and sports, fashion companies, along with beauty and wellness products.
On the other hand, list prices dipped 1.3% q-o-q in 4Q2024, almost getting rid of the quarterly increase of 1.7% that was recorded in 3Q2024. However, retail prices ended 2024 with an increase of 1.0% y-o-y compared to the 1.2% y-o-y surge notched in 2023.
Moreover, the island-wide vacancy level in the retail property market slid 0.3% q-o-q to 6.2% in 4Q2024. This was mostly steered by decreases in the opportunity rates in the Central Area (falling 0.4% q-o-q to 7.2%) and Outside Central Region (slipping 0.3% q-o-q to 4.3%) last quarter.
Angelia Phua, consulting director of research and consultancy, Singapore, at JLL, claims that the latest rental and rate data show that the healing in the broader retail real property industry is mainly on course despite ongoing economic difficulties such as usage leakage, the dampening effects of price rising cost of living on usage and price tensions encountered by retail drivers.
Looking in advance, the island-wide retail vacancy level is anticipated to remain tight this year, which should sustain rental development for prime retail spots, claims Phua. She includes that the market is going to be buoyed by sustained domestic intake, a tighter labour market, and a positive tourism expectation in 2025.
