Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Singapore’s overall retail sales (excluding motor vehicles) dropped from $3.5 billion in March to $3.3 billion in April, in tandem with the lesser tourist arrivals. Nevertheless, May observed a bounce back to $3.6 billion, generated by food and liquor shopping. Retail action shows up to have readjusted to safe levels in 2Q2024, following the concert-heavy months in 1Q2024, indicates Ethan Hsu, Knight Frank’s head of retail.
Whilst the retail industry field in Singapore continues to be attractive to retailers, Hsu keeps in mind that inflation and a good Singapore dollar have actually tempered growth as retailers deal with going up operating costs.
Since 1H2024, prime leas islandwide have actually expanded 1.5%, assisted by the post-pandemic regeneration and new launchings by local and international brand names. This includes British footwear retailer Hunter that opened up its 1st shop in Singapore at Plaza Singapura and French sports apparel brand Hoka’s beginning in Ion Orchard. The F&B market was joined by beginners Ipoh Town, a Malaysian classic coffee bar at Jewel Changi Airport; and Kebuke, a Taiwanese bubble tea establishment at Taste Orchard.
Prime retail spots in the city-fringe viewed the highest rentals improvement in 2Q2024, rising 1.3% q-o-q to $23.70 psf pm. Prime rents in suburban areas climbed up 1.2% q-o-q to $26.50 psf pm, followed by the Marina Centre, City Hall and Bugis area (up 1% q-o-q to $25.50 psf pm) and the Orchard area (up 0.6% q-o-q to $30.70 psf pm).
Knight Frank specifies top retail locations as rental-yielding units of 350 to 1,500 sq ft with the best front view, connectivity, footfall and accessibility in a mall, such as ground- or basement-floor retail industry mall units linked to an MRT terminal or bus interchange.
In the middle of this uncertain atmosphere, Hsu thinks prime retail rental growth will likely be sluggish for the remainder of the year, as climbing prices might likely deter expansion by merchants and urge consolidation as an alternative. Even so, he believes rental fees are still on course to grow in between 2% and 4% for the whole year, unmodified from his earlier estimates.
Data from the Audit and Corporate Regulatory Authority reveal that retail and F&B company cessations completed 2,631 in 2Q2024, exceeding the 2,502 organizations developed throughout the exact same period. This is a reverse from the last quarter when there was a net boost of 295 new retail and F&B ventures.
While Taylor Swift and Coldplay concert-goers boosted visitors to a spike of almost 1.5 million in March, visitor arrivals secured last quarter, with 1.4 million guests documented in April and 1.3 million tourists logged in May and June respectively.
The standard prime retail rentals islandwide grew by 0.9% q-o-q and 3.8% y-o-y to get to $27.40 psf per month (psf pm) in 2Q2024, according to a July Knight Frank retail record. The progress comes regardless of reduced visitor appearances adhering to a short-term boom as a result of high-profile shows in the very first quarter of the year.