Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Potential measures include limiting the number of F&B licences issued within a specific place, capping the proportion of net lettable area allocated for F&B in a mall to a stakeholder-reviewed proportion, or imposing a tax on F&B chains that expand beyond a specific range of avenues within a designated period. “These can all work 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 acceptable and lasting pace,” adds Hsu.
Prime retail areas in the Marina Centre, City Hall and Bugis areas averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents dropped 0.3% q-o-q to $24 psf pm. Suburban prime retail leas averaged $26.80 psf pm, up 0.3% q-o-q.
The commonly stagnant leas follow combined retail sales productivity in 1Q2024. While data from the Singapore Department of Statistics revealed retail sales excluding motor vehicles reviving from a year-end slump to hit $4 billion in January on the back of Chinese New Year celebrations, it subsequently fell to $3.2 billion in February prior to climbing back up to $4.2 billion in March.
Mentioning information from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that a total of 3,047 F&B businesses closed down in 2024– the biggest figure ever since 2005. On the other hand, 3,793 F&B businesses were developed the same year, the second-highest figure ever since 3,934 starts in 2021.
Singapore prime retail leas stayed mainly flat in 1Q2025 amidst a retail setting that remains to encounter ascending operating costs and labour constraints, states Knight Frank Singapore. According to a research record posted by the company in April, prime retail leas in Orchard averaged at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
The rapid entries and exits of F&B brands can point to a sign of over growing and the need for intervention to stabilise the marketplace, says Knight Frank. “The dining scene seems getting to oversupplied amounts, and determines to cool the market for a lasting field might be required sooner rather than later,” claims Ethan Hsu, head of retail at Knight Frank Singapore.
Simultaneously, the F&B setting has actually viewed an accelerated rate of dining establishments establishing and shutting down, adds the Knight Frank statement. In 1Q2025, F&B brand names consisting of Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, while hotpot chain Haidilao shut 2 sites.
Provided the persistent high-cost atmosphere and the increasingly competitive F&B scene, the outlook for the retail remains difficult, states Knight Frank. On top of that, sweeping tariffs announced by US Head of state Donald Trump could drag down business view. “For a small trading state like Singapore, this could have significant results that could weaken [Knight Frank’s] delicate 1% to 3% growth forecast of prime retail rental fees in 2025,” states Hsu.
