Tourism recovery pushes Orchard Road retail rents up 2.3% y-o-y in 4Q2024: Savills
Overall, retail rent across all areas recorded positive net need in 2024, with the Downtown Core Planning Area surpassing the rest. Net absorption for 2024 reached the highest level in the last decade, at more than 1.2 million sq ft, up from the three-year historical yearly average of 958,000 sq ft.
He believes that raising outgoing holiday in the year in the future can further dilute intake spend in Singapore, primarily in the suburbs.
He adds in: “Nevertheless, the overall retail sales performance remains unsure as buyers shift their buying patterns and behaviors. Paired with limited prime retail supply in the near term, sustained renting need in tourist destinations and prime-facing places are expected to continue driving prime retail rents.”
In addition, openings for retail area in the Orchard Planning Area and the Rest of Central Area fell to a record low in the last five to six years on the back of improved take-up and limited supply. “The higher demand in the Downtown Core and Orchard Planning Area could be steered by the arriving of new international brands as the travel recovery bolstered retailers’ assurance,” mentions the Savills’ statement.
Looking ahead, tourism recovery is anticipated to proceed in 2025 with 17 million to 18.5 million expected visitor arrivals following a pipeline of recreation and Mice occasions, claims Alan Cheong, executive supervisor of research and consultancy at Savills Singapore.
Rental development for malls in the Orchard space is predicted to reach the upper bound of the 1% to 2% range in 2025, while suburban rental development is presumed to come in the lower end because of sluggish residential costs, says Cheong.
According to Savills Singapore, this is in business with URA’s rental index data, that monitored leas in the central location growing at a quicker level of 1.0% y-o-y in 4Q2024. Meanwhile, rental fees in the fringe location fell by 1.0% y-o-y for the very same period.
Recovery in inbound tourists has driven demand for retail area in tourist areas, according to a report by Savills Singapore. Leas of Orchard location shopping malls tracked by the consultancy recorded a 2.3% y-o-y surge last quarter, whilst suburban area shopping centers declined a little by 0.1% y-o-y around the exact same period.
Islandwide vacancy for retail places continued to relieve, dropping from 6.5% in 4Q2023 to 6.2% in 4Q2024– the most affordable in 10 years.
