Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024
Rental growth in Singapore’s retail property industry recorded an annual raise of 0.5% for the whole of 2024, according to realty statistics released by URA on Jan 24. This notes the second consecutive year that the local retail market has seen leas improve, after raising 0.4% y-o-y in 2023.
Additionally, the island-wide vacancy rate in the retail real estate industry slipped 0.3% q-o-q to 6.2% in 4Q2024. This was greatly driven by declines in the opportunity rates in the Central Area (falling 0.4% q-o-q to 7.2%) and Outside Central Region (dropping 0.3% q-o-q to 4.3%) last quarter.
Net retail interest in the Outside Central Region got to 560,000 sq ft in 2024, over 4 times the 129,000 sq ft in 2023, while net supply amounted to 603,000 sq ft.
On the other hand, Leonard Tay, head of research at Knight Frank Singapore, believes that the relatively strong Singapore money and inflationary price pressures can spur several citizens to redirect their retail investing overseas. “Prime retail rental growth for 2025 is expected to reduce and secure within a forecasted range of between 1% and 3%,” he states.
Angelia Phua, consulting director of research and consultancy, Singapore, at JLL, states that the most up to date rentals and cost stats show that the healing in the more comprehensive retail real estate sector is greatly on course despite continuous economic obstacles such as consumption leakage, the dampening impacts of rate inflation on consumption and price stress dealt with by retail operators.
Not just prime retail rooms in the Central Region have seen an uptick in need. Net retail need in the Outside Central Area (OCR) was 560,000 sq ft last year, approximately 4 times the 129,000 sq ft consumed in 2023.
As an example, French sports brand Salomon opened up outlets at Ngee Ann City and Orchard Central, while Finnish lifestyle company Marimekko started its 2nd shop at Ngee Ann City after its 2023 debut at ION Orchard.
“Rent development possibility, however, could be moderated by consumption leak emerging from outgoing travel and the durability of the Singapore money, along with sellers’ level of sensitivity to rent hikes amidst a challenging and unsure operating atmosphere,” states Phua. Based Upon JLL Research study’s retail possession profile, she expects leas for prime flooring space of investment-grade retail assets to proceed growing by 1.5 to 2.5% y-o-y in 2025.
Wong mentions that vacancy rates in the OCR climbed a little to 4.3% in 4Q2024, ascend from 4.2% in 4Q2023 but still below the pre-pandemic 6.2% in 4Q2019, which reflects a tough suburban retail market. He includes: “Boosted connection and diversified retail services, consisting of life-style and eating options, have improved rural charm, attracting respected abroad F&B brands. Japan’s Warabimochi Kamakura and Hong Kong’s Ging Sun Ho King of Bun have actually debuted at One Holland Village and Tampines Mall, respectively.”
The descending fad in the island wide retail vacancy rate, which slipped for the third successive quarter, underpinned durable occupier demand amidst a modest supply of retail space this year, claims Phua.
” Sellers remain to integrate experiential elements into their bricks-and-mortar establishments, to enhance the shopping experience and drive customer engagement. Zara and Levi’s resumed at ION Orchard in 2024, with Zara introducing express in-store pick-up and Levi’s revealed its initial Dressmaker Store,” states Wong Xian Yang, head of research study Singapore & SEA at Cushman & Wakefield.
The current information indicates that retail rentals improved 0.6% q-o-q in 4Q2024, building on the quarterly boost of 0.3% documented in 3Q2024.
She includes that brand-new need for retail area was led by the entry of new-to-market labels and the development of existing brands such as F&B, active lifestyle and sports, fashion labels, as well as beauty and wellness brands.
On the other hand, market prices dipped 1.3% q-o-q in 4Q2024, almost eliminating the quarterly increase of 1.7% that was documented in 3Q2024. Nonetheless, retail prices finished 2024 with a rise of 1.0% y-o-y compared to the 1.2% y-o-y surge notched in 2023.
Looking in advance, the island-wide retail openings level is expected to continue to be limited this year, which must sustain rental growth for prime retail spaces, says Phua. She adds that the marketplace will be buoyed by sustained domestic usage, a tighter labour market, and a positive tourism overview in 2025.
