Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Provided the persistent high-cost environment and the increasingly affordable F&B scene, the outlook for the retail stays difficult, says Knight Frank. Additionally, sweeping tariffs introduced by US Head of state Donald Trump can pull down business position. “For a small trading country like Singapore, this might have far-reaching impacts that can undermine [Knight Frank’s] delicate 1% to 3% development projection of prime retail leas in 2025,” says Hsu.
Possible measures consist of restricting the amount of F&B licences provided within a particular area, capping the percentage of net lettable area allocated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax on F&B chains that broaden past a certain range of shops within a designated period. “These can all act as a call for F&B drivers not to bite off greater than they can eat and expand the development of F&B to an extra reasonable and sustainable pace,” includes Hsu.
Prime retail areas in the Marina Centre, City Hall and Bugis spots equated at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents dipped 0.3% q-o-q to $24 psf pm. Suburban prime retail rentals averaged $26.80 psf pm, up 0.3% q-o-q.
Singapore prime retail rents stayed mainly flat in 1Q2025 amid a retail setting that continues to face ascending operating costs and labour restraints, states Knight Frank Singapore. According to a research report posted by the business in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
At the same time, the F&B scene has observed an increased pace of restaurants setting up and closing, adds in the Knight Frank statement. In 1Q2025, F&B labels including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao closed 2 outlets.
Pointing out data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notes that a total of 3,047 F&B businesses closed down in 2024– the top number since 2005. On the other hand, 3,793 F&B businesses were formed the same year, the second-highest number ever since 3,934 starts in 2021.
The largely stale rents comply with blended retail sales productivity in 1Q2024. Whilst information from the Singapore Department of Statistics revealed retail sales excluding car reviving from a year-end depression to hit $4 billion in January on the back of Chinese New Year events, it subsequently slipped to $3.2 billion in February before moving back up to $4.2 billion in March.
The fast entries and exits of F&B brands might point to an indicator of over growing and the demand for intervention to secure the marketplace, says Knight Frank. “The dining scene appears to be reaching oversupplied values, and determines to cool the market for a lasting field may be needed earlier as opposed to later,” says Ethan Hsu, head of retail at Knight Frank Singapore.
