Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
As of 1H2024, prime rental fees islandwide have expanded 1.5%, supported by the post-pandemic revival and new launchings by local and foreign brand names. This includes British shoes retailer Hunter which opened its very first establishment in Singapore at Plaza Singapura and French sports apparel company Hoka’s beginning in Ion Orchard. The F&B industry was joined by newcomers Ipoh Town, a Malaysian old-fashioned coffee bar at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
The average prime retail leas islandwide grew by 0.9% q-o-q and 3.8% y-o-y to reach $27.40 psf monthly (psf pm) in 2Q2024, according to a July Knight Frank retail report. The progress comes despite lower traveler appearances adhering to a temporary boom due to top-level performances in the first quarter of the year.
While the retail store sector in Singapore stays attractive to retailers, Hsu notes that rising cost of living and a strong Singapore money have tempered development as merchants encounter increasing operating expense.
Data from the Accounting and Corporate Regulatory Authority reveal that retail and F&B company cessations totalled 2,631 in 2Q2024, going beyond the 2,502 organizations formed throughout the very same period. This is a reverse from the previous quarter when there was a net rise of 295 new retail and F&B enterprises.
Prime retail spaces in the city-fringe observed the highest possible leasing growth in 2Q2024, rising 1.3% q-o-q to $23.70 psf pm. Prime rents in suburbs climbed up 1.2% q-o-q to $26.50 psf pm, adhered to by the Marina Centre, City Hall and Bugis area (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).
While Taylor Swift and Coldplay concert-goers enhanced site visitors to a point of close to 1.5 million in March, traveller arrivals secured last quarter, with 1.4 million guests recorded in April and 1.3 million guests logged in May and June specifically.
Knight Frank defines prime retail places as rental-yielding units of 350 to 1,500 sq ft with the best frontage, online connectivity, footfall and access in a shopping mall, like ground- or basement-floor retail industry shopping center units linked to an MRT station or bus interchange.
Singapore’s complete retail sales (leaving out motor vehicles) dropped from $3.5 billion in March to $3.3 billion in April, in tandem with the lower visitor returns. Nevertheless, May observed a revive to $3.6 billion, generated by food and booze expenditures. Retail action appears to have altered to safe levels in 2Q2024, mirroring the concert-heavy months in 1Q2024, mentions Ethan Hsu, Knight Frank’s head of retail.
Amid this unsure atmosphere, Hsu believes prime retail rental progression will likely be weaker for the rest of the year, as increasing expenses could potentially hinder growth by retailers and compel consolidation instead. Nonetheless, he believes rental fees are still on the right track to expand in between 2% and 4% for the whole year, the same from his earlier estimates.
