Tourism recovery pushes Orchard Road retail rents up 2.3% y-o-y in 4Q2024: Savills
Recovery in inbound visitors has actually driven need for retail place in tourist areas, according to a statement by Savills Singapore. Rents of Orchard location shopping malls tracked by the consultancy documented a 2.3% y-o-y surge last quarter, whilst suburban area malls decreased slightly by 0.1% y-o-y across the exact same duration.
He adds: “Nonetheless, the general retail sales efficiency remains unclear as consumers move their buying habits and behaviours. Paired with limited prime retail supply in the near term, sustained leasing demand in tourist locations and prime-facing places are expected to proceed steering prime retail rents.”
In addition, openings for retail space in the Orchard Planning Area and the Rest of Central Area fell to a record low in the last 5 to six years on the back of enhanced take-up and tight supply. “The greater need in the Downtown Core and Orchard Planning Area might be steered by the arrival of brand-new foreign labels as the travel recovery bolstered sellers’ confidence,” considers the Savills’ report.
According to Savills Singapore, this is in line with URA’s rental index data, that monitored leas in the main area increasing at a quicker level of 1.0% y-o-y in 4Q2024. At the same time, rental fees in the edge area dropped by 1.0% y-o-y for the similar period.
He thinks that raising outbound travel in the year to come could further reduce intake spend in Singapore, especially in the suburbs.
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Generally, retail rent across all regions recorded good net need in 2024, with the Downtown Core Planning Area exceeding the remainder. Final absorption for 2024 reached the highest level in the last decade, at greater than 1.2 million sq ft, up from the three-year historic annual standard of 958,000 sq ft.
Islandwide openings for retail areas proceeded to alleviate, falling from 6.5% in 4Q2023 to 6.2% in 4Q2024– the lowest in ten years.
Rental development for shopping centers in the Orchard space is forecasted to get to the upper bound of the 1% to 2% range in 2025, while suburban rental development is projected to come in the lower end due to sluggish domestic costs, mentions Cheong.
Looking ahead, tourist recuperation is anticipated to continue in 2025 with 17 million to 18.5 million anticipated vacationer landings complying with a pipeline of recreation and Mice activities, states Alan Cheong, executive manager of research and consultancy at Savills Singapore.
