Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
Net retail demand in the Outside Central Region reached 560,000 sq ft in 2024, over 4 times the 129,000 sq ft in 2023, while net supply completed 603,000 sq ft.
Not only prime retail rooms in the Central Area have viewed an uptick in need. Net retail interest in the Outside Main Area (OCR) was 560,000 sq ft last year, around 4 times the 129,000 sq ft consumed in 2023.
Angelia Phua, consulting supervisor of research and consultancy, Singapore, at JLL, states that the most recent leasing and rate statistics show that the recuperation in the wider retail real estate market is mostly on track in spite of continuous economic challenges such as consumption leakage, the dampening effects of rate rising cost of living on consumption and expense stress faced by retail drivers.
Meanwhile, list prices dipped 1.3% q-o-q in 4Q2024, close to removing the quarterly raise of 1.7% that was documented in 3Q2024. However, retail prices finished 2024 with a rise of 1.0% y-o-y contrasted to the 1.2% y-o-y surge marked in 2023.
The downward pattern in the island wide retail vacancy rate, which slid for the 3rd sequent quarter, underpinned durable occupier need in the middle of a moderate supply of retail area this year, claims Phua.
On the other hand, Leonard Tay, head of study at Knight Frank Singapore, says that the fairly solid Singapore money and inflationary rate pressures can spur several locals to redirect their retail costs offshore. “Prime retail rental development for 2025 is expected to reduce and stabilise within a forecasted range of in between 1% and 3%,” he claims.
Wong indicates that vacancy rates in the OCR increased somewhat to 4.3% in 4Q2024, ascend from 4.2% in 4Q2023 however still below the pre-pandemic 6.2% in 4Q2019, which mirrors a resilient suburban retail market. He adds: “Boosted connection and assorted retail services, consisting of life-style and eating alternatives, have actually improved country appeal, attracting well-known overseas F&B labels. Japan’s Warabimochi Kamakura and Hong Kong’s Ging Sun Ho King of Bun have debuted at One Holland Village and Tampines Mall, respectively.”
She includes that new need for retail area was headed by the entry of new-to-market companies and the growth of occurring brands such as F&B, active lifestyle and sports, fashion labels, as well as beauty and wellness products.
Furthermore, the island-wide vacancy rate in the retail property industry slipped 0.3% q-o-q to 6.2% in 4Q2024. This was mainly driven by reductions in the opportunity rates in the Central Area (falling 0.4% q-o-q to 7.2%) and Outside Central Region (dropping 0.3% q-o-q to 4.3%) previous quarter.
As an example, French sports brand Salomon opened outlets at Ngee Ann City and Orchard Central, while Finnish lifestyle brand name Marimekko started its 2nd site at Ngee Ann City after its 2023 released at ION Orchard.
The most recent data shows that retail rentals improved 0.6% q-o-q in 4Q2024, building on the quarterly rise of 0.3% documented in 3Q2024.
Looking ahead, the island-wide retail vacancy rate is anticipated to continue to be limited this year, which need to support rental growth for prime retail spaces, claims Phua. She adds that the market is going to be buoyed by continual domestic intake, a tighter labour market, and a favorable tourism outlook in 2025.
Rental development in Singapore’s retail property sector registered a yearly raise of 0.5% for the entire of 2024, according to realty statistics released by URA on Jan 24. This marks the 2nd succeeding year that the regional retail market has seen rental fees improve, after increasing 0.4% y-o-y in 2023.
“Lease development ability, however, could be regulated by consumption leakage arising from outgoing travel and the power of the Singapore money, along with retailers’ level of sensitivity to rent out hikes among a challenging and unsure operating atmosphere,” claims Phua. Based on JLL Study’s retail possession portfolio, she expects rental fees for prime floor room of investment-grade retail assets to continue expanding by 1.5 to 2.5% y-o-y in 2025.
” Sellers remain to incorporate experiential components right into their bricks-and-mortar stores, to enhance 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 very first Dressmaker Outlet,” claims Wong Xian Yang, head of study Singapore & SEA at Cushman & Wakefield.