Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The mostly inactive leas comply with blended retail sales performance in 1Q2024. Whilst information from the Singapore Department of Statistics showed retail sales omitting motor vehicles rebounding from a year-end depression to hit $4 billion in January on the back of Chinese New Year festivities, it consequently slipped to $3.2 billion in February prior to rising back up to $4.2 billion in March.
Offered the consistent high-cost setting and the increasingly affordable F&B scene, the outlook for the retail stays tough, states Knight Frank. In addition, sweeping tariffs introduced by US President Donald Trump could drag down business sentiment. “For a smaller trading state like Singapore, this may have far-reaching impacts that could weaken [Knight Frank’s] delicate 1% to 3% development forecast of prime retail leas in 2025,” claims Hsu.
The rapid entries and exits of F&B brands could point to a sign of overgrowth and the need for intervention to secure the market, states Knight Frank. “The dining scene seems getting to oversupplied values, and determines to cool down the marketplace for a sustainable sector may be needed earlier rather than later,” claims Ethan Hsu, head of retail at Knight Frank Singapore.
Potential measures consist of limiting the amount of F&B licences issued within a certain place, capping the percentage of net lettable area designated for F&B in a mall to a stakeholder-reviewed proportion, or enforcing a tax obligation on F&B chains that expand past a certain range of avenues within a designated period. “These can all function as a call for F&B operators not to bite off greater than they can chew and expand the growth of F&B to an extra reasonable and lasting pace,” adds Hsu.
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Singapore prime retail rentals stayed mostly flat in 1Q2025 amid a retail setting that remains to encounter rising operating costs and labour constraints, claims Knight Frank Singapore. According to a research report published by the company 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.
Simultaneously, the F&B scene has observed an increased speed of restaurants 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 shops.
Mentioning data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank observes that a total amount of 3,047 F&B businesses shut down in 2024– the biggest figure since 2005. On the other hand, 3,793 F&B businesses were formed the same year, the second-highest figure since 3,934 openings in 2021.
Prime retail spaces in the Marina Centre, City Hall and Bugis spots averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents fell 0.3% q-o-q to $24 psf pm. Suburban prime retail leas averaged $26.80 psf pm, up 0.3% q-o-q.
