Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Provided the relentless high-cost setting and the increasingly affordable F&B scene, the outlook for the retail stays challenging, claims Knight Frank. Additionally, sweeping tariffs revealed by United States Head of state Donald Trump can drag down business position. “For a smaller trading country like Singapore, this may have far-reaching results that can weaken [Knight Frank’s] delicate 1% to 3% growth projection of prime retail rental fees in 2025,” claims Hsu.
Singapore prime retail rentals stayed greatly flat in 1Q2025 amidst a retail environment that remains to deal with increasing operating costs and labour restraints, claims Knight Frank Singapore. According to a research record released by the company in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
At the same time, the F&B scene has seen an accelerated speed of dining establishments setting up and shutting down, incorporates the Knight Frank information. In 1Q2025, F&B brand names including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao shut 2 outlets.
The largely stagnant leas comply with combined retail sales productivity in 1Q2024. Whilst information from the Singapore Department of Statistics revealed retail sales omitting car reviving from a year-end downturn to hit $4 billion in January on the back of Chinese New Year celebrations, it subsequently fell to $3.2 billion in February before moving back up to $4.2 billion in March.
Potential measures include limiting the amount of F&B permits provided within a particular area, capping the portion of net lettable area allocated for F&B in a mall to a stakeholder-reviewed ratio, or enforcing a tax on F&B chains that increase past a particular range of avenues within a designated period. “These can all function as a call for F&B operators not to bite off more than they can chew and spread out the development of F&B to a more reasonable and lasting pace,” adds Hsu.
The fast entries and exits of F&B brands can indicate an indicator of overgrowth and the need for intervention to stabilise the marketplace, claims Knight Frank. “The dining scene seems getting to oversupplied values, and determines to cool the market for a lasting market may be needed sooner as opposed to later,” states Ethan Hsu, head of retail at Knight Frank Singapore.
Citing data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that a total amount of 3,047 F&B businesses shut down in 2024– the top figure ever since 2005. On the other hand, 3,793 F&B businesses were developed the same year, the second-highest number ever since 3,934 starts in 2021.
Prime retail spaces in the Marina Centre, City Hall and Bugis areas averaged at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents fell 0.3% q-o-q to $24 psf pm. Suburban prime retail leas evened out $26.80 psf pm, up 0.3% q-o-q.
