Prime retail rents islandwide up 0.9% in 2Q2024: Knight Frank
Since 1H2024, prime rents islandwide have grown 1.5%, supported by the post-pandemic recovery and new launchings by local and international brand names. This consists of British shoes store Hunter which opened up its first store in Singapore at Plaza Singapura and French sports wear company Hoka’s introduction in Ion Orchard. The F&B field was joined by beginners Ipoh Town, a Malaysian classic cafe at Jewel Changi Airport; and Kebuke, a Taiwanese bubble tea establishment at Taste Orchard.
Information from the Accountancy and Corporate Regulatory Authority show that retail and F&B business cessations completed 2,631 in 2Q2024, exceeding the 2,502 companies developed during the very same period. This is a switch from the past quarter when there was a net rise of 295 brand-new retail and F&B enterprises.
The average prime retail rents islandwide expanded by 0.9% q-o-q and 3.8% y-o-y to get to $27.40 psf each month (psf pm) in 2Q2024, according to a July Knight Frank retail record. The development occurs in spite of reduced vacationer arrivals following a short-lived boost due to prominent performances in the very first quarter of the year.
Knight Frank defines prime retail spots as rental-yielding units of 350 to 1,500 sq ft with the most ideal front view, online connectivity, footfall and accessibility in a shopping mall, for instance, ground- or basement-floor retail industry mall units linked to an MRT terminal or bus interchange.
Prime retail places in the city-fringe viewed the highest possible rentals improvement in 2Q2024, increasing 1.3% q-o-q to $23.70 psf pm. Prime rents in suburbs climbed 1.2% q-o-q to $26.50 psf pm, adhered to 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).
While the retail industry in Singapore remains appealing to retailers, Hsu notes that rising cost of living and a solid Singapore dollar have actually solidified development as stores encounter rising operating costs.
While Taylor Swift and Coldplay concert-goers increased visitors to a point of almost 1.5 million in March, visitor arrivings stabilised last quarter, with 1.4 million tourists recorded in April and 1.3 million tourists reported in May and June specifically.
Singapore’s total retail sales (excluding motor vehicles) dropped from $3.5 billion in March to $3.3 billion in April, in tandem with the lower tourist returns. Still, May saw a bounce back to $3.6 billion, steered by food items and alcohol expenditures. Retail action seems to have actually readjusted to sustainable status in 2Q2024, mirroring the concert-heavy months in 1Q2024, notes Ethan Hsu, Knight Frank’s head of retail.
Amid this unclear setting, Hsu thinks prime retail rental progression will likely be weaker for the remainder of the year, as climbing prices might possibly prevent expansion by retailers and oblige consolidation instead. Even so, he believes rental fees are still on course to expand between 2% and 4% for the whole year, the same from his earlier estimates.
