Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Amidst this unclear atmosphere, Hsu believes prime retail rental development will likely be slow for the remainder of the year, as climbing prices could potentially discourage development by retailers and urge incorporation instead. Nevertheless, he thinks leas are still on track to grow between 2% and 4% for the entire year, the same from his earlier estimates.
As of 1H2024, prime rents islandwide have grown 1.5%, assisted by the post-pandemic regeneration and new launchings by local and foreign companies. This consists of British footwear retailer Hunter which launched its 1st establishment in Singapore at Plaza Singapura and French sportswear brand Hoka’s opening in Ion Orchard. The F&B field was joined by startups Ipoh Town, a Malaysian traditional cafe at Jewel Changi International Airport; and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
The standard prime retail rents islandwide expanded by 0.9% q-o-q and 3.8% y-o-y to reach $27.40 psf each month (psf pm) in 2Q2024, according to a July Knight Frank retail record. The development comes despite lesser traveler arrivals following a temporary boom because of high-profile performances in the first quarter of the year.
Whilst the retail industry market in Singapore stays attractive to retailers, Hsu keeps in mind that inflation and a strong Singapore dollar have actually tempered development as sellers encounter rising operating costs.
Singapore’s total retail sales (omitting motor vehicles) fell from $3.5 billion in March to $3.3 billion in April, in tandem with the lower visitor arrivals. Still, May observed a revive to $3.6 billion, driven by food items and liquor shopping. Retail activity appears to have readjusted to maintainable levels in 2Q2024, mirroring the concert-heavy months in 1Q2024, notes Ethan Hsu, Knight Frank’s head of retail.
While Taylor Swift and Coldplay concert-goers improved visitors to a peak of close to 1.5 million in March, tourist arrivings stabilised last quarter, with 1.4 million visitors documented in April and 1.3 million tourists logged in May and June specifically.
Knight Frank defines top retail spots as rental-yielding units of 350 to 1,500 sq ft with the best frontage, connectivity, footfall and availability in a shopping mall, just like ground- or basement-floor retail industry mall units linked to an MRT station or bus interchange.
Prime retail places in the city-fringe observed the highest possible leasing improvement in 2Q2024, climbing 1.3% q-o-q to $23.70 psf pm. Prime leas in suburban areas climbed 1.2% q-o-q to $26.50 psf pm, complied with by the Marina Centre, City Hall and Bugis place (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).
Information from the Accountancy and Corporate Regulatory Authority show that retail and F&B company cessations amounted to 2,631 in 2Q2024, going beyond the 2,502 companies developed throughout the very same duration. This is a reverse from the previous quarter when there was a net boost of 295 new retail and F&B business.
