Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The largely stagnant rents comply with mixed retail sales productivity in 1Q2024. Whilst information from the Singapore Department of Statistics presented retail sales omitting motor vehicles rebounding from a year-end depression to strike $4 billion in January on the back of Chinese New Year celebrations, it consequently tumbled to $3.2 billion in February before rising back up to $4.2 billion in March.
Prime retail spaces in the Marina Centre, City Hall and Bugis areas equated at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents decreased 0.3% q-o-q to $24 psf pm. Suburban prime retail leas averaged $26.80 psf pm, up 0.3% q-o-q.
Offered the relentless high-cost atmosphere and the considerably competitive F&B scene, the outlook for the retail continues to be tough, claims Knight Frank. In addition, sweeping tariffs revealed by United States Head of state Donald Trump could pull down business sentiment. “For a smaller trading nation like Singapore, this may have significant impacts that could weaken [Knight Frank’s] delicate 1% to 3% progress foresight of prime retail rental fees in 2025,” states Hsu.
The fast entries and exits of F&B brands might point to a sign of overgrowth and the demand for intervention to stabilise the marketplace, claims Knight Frank. “The dining scene appears to be reaching oversupplied levels, and gauges to cool down the market for a sustainable industry may be needed sooner instead of later on,” states Ethan Hsu, head of retail at Knight Frank Singapore.
Possible steps consist of limiting the number of F&B licences released within a particular area, capping the proportion of net lettable location allocated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax on F&B chains that broaden past a specific number of shops within a designated period. “These can all work as a call for F&B operators not to bite off more than they can eat and spread out the growth of F&B to an extra acceptable and lasting pace,” includes Hsu.
Citing information 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 biggest figure since 2005. On the other hand, 3,793 F&B businesses were developed the same year, the second-highest number ever since 3,934 openings in 2021.
At the same time, the F&B scene has actually viewed an increased rate of eateries establishing and shutting down, adds the Knight Frank statement. In 1Q2025, F&B brands including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao shut 2 shops.
Singapore prime retail rentals stayed largely flat in 1Q2025 amid a retail environment that continues to deal with increasing operating expense and labour restrictions, says Knight Frank Singapore. According to a research record published by the company in April, prime retail rents in Orchard equated at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
