Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
The descending fad in the island wide retail vacancy rate, which dropped for the third successive quarter, underpinned durable tenant demand amid a modest supply of retail area this year, claims Phua.
Rental development in Singapore’s retail real estate market listed an annual increase of 0.5% for the entire of 2024, according to real estate statistics published by URA on Jan 24. This marks the second consecutive year that the regional retail market has actually found leas increase, after raising 0.4% y-o-y in 2023.
” Sellers continue to include experiential elements right into their bricks-and-mortar establishments, to enhance the buying experience and drive consumer activity. Zara and Levi’s resumed at ION Orchard in 2024, with Zara releasing express in-store pick-up and Levi’s revealed its very first Tailor Outlet,” states Wong Xian Yang, head of research study Singapore & SEA at Cushman & Wakefield.
Angelia Phua, consulting supervisor of research and consultancy, Singapore, at JLL, says that the most recent rentals and price stats suggest that the healing in the broader retail real estate industry is greatly on track in spite of recurring financial challenges such as usage leakage, the dampening impacts of cost inflation on consumption and cost pressures encountered by retail drivers.
Looking ahead, the island-wide retail vacancy level is expected to continue to be tight this year, which should sustain rental development for prime retail spots, claims Phua. She adds that the market will be buoyed by continual domestic intake, a tighter labour market, and a favorable tourism outlook in 2025.
Wong mentions that vacancy rates in the OCR climbed somewhat to 4.3% in 4Q2024, up from 4.2% in 4Q2023 yet still below the pre-pandemic 6.2% in 4Q2019, which shows a resilient suburban retail market. He includes: “Boosted connectivity and assorted retail services, including life-style and eating alternatives, have actually enhanced rural allure, drawing in reputed overseas F&B companies. Japan’s Warabimochi Kamakura and Hong Kong’s Ging Sun Ho King of Bun have actually debuted at One Holland Village and Tampines Mall, specifically.”
In addition, the island-wide vacancy level in the retail property market slipped 0.3% q-o-q to 6.2% in 4Q2024. This was greatly steered by decreases in the vacancy rates in the Central Area (dropping 0.4% q-o-q to 7.2%) and Outside Central Region (falling 0.3% q-o-q to 4.3%) last quarter.
Net retail interest in the Outside Central Region reached 560,000 sq ft in 2024, over 4 times the 129,000 sq ft in 2023, while net supply totalled 603,000 sq ft.
As an example, French sports brand Salomon opened channels at Ngee Ann City and Orchard Central, while Finnish lifestyle company Marimekko started its 2nd outlet at Ngee Ann City after its 2023 released at ION Orchard.
Not just prime retail areas in the Central Area have actually viewed an uptick in need. Net retail interest in the Outside Main Region (OCR) was 560,000 sq ft last year, about four times the 129,000 sq ft absorbed in 2023.
On the other hand, Leonard Tay, head of research at Knight Frank Singapore, opines that the relatively solid Singapore dollar and inflationary cost pressures could spur numerous locals to reroute their retail spending overseas. “Prime retail rental development for 2025 is anticipated to relieve and stabilise within a projected range of in between 1% and 3%,” he claims.
On the other hand, list prices dipped 1.3% q-o-q in 4Q2024, nearly getting rid of the quarterly rise of 1.7% that was recorded in 3Q2024. Nonetheless, retail prices ended 2024 with a rise of 1.0% y-o-y contrasted to the 1.2% y-o-y increase notched in 2023.
She includes that brand-new need for retail space was headed by the entrance of new-to-market companies and the expansion of existing brands such as F&B, active lifestyle and sports, fashion labels, in addition to beauty and wellness brands.
“Rental fee development possibility, however, could be regulated by usage leak emerging from outbound travel and the power of the Singapore money, in addition to sellers’ level of sensitivity to rent out hikes among a challenging and uncertain operating environment,” says Phua. Based Upon JLL Research study’s retail asset profile, she expects rental fees for prime flooring space of investment-grade retail assets to proceed expanding by 1.5 to 2.5% y-o-y in 2025.
The most recent information suggests that retail rents increased 0.6% q-o-q in 4Q2024, building on the quarterly boost of 0.3% documented in 3Q2024.