Singapore’s retail market registers second consecutive growth year as rents increase 0.5% y-o-y in 2024

Angelia Phua, consulting director of research study and consultancy, Singapore, at JLL, says that the most recent rentals and cost stats show that the recuperation in the more comprehensive retail real property market is greatly on course despite ongoing financial challenges such as intake leakage, the dampening effects of rate rising cost of living on usage and cost pressures faced by retail operators.

The most recent data shows that retail leas raised 0.6% q-o-q in 4Q2024, establishing on the quarterly rise of 0.3% captured in 3Q2024.

“Rent development potential, however, could be regulated by intake leak arising from outgoing travel and the power of the Singapore money, in addition to stores’ sensitivity to rent hikes in the middle of a difficult and unpredictable operating setting,” claims Phua. Based on JLL Research study’s retail possession portfolio, she anticipates leas for prime floor space of investment-grade retail assets to continue expanding by 1.5 to 2.5% y-o-y in 2025.

On the other hand, Leonard Tay, head of research at Knight Frank Singapore, says that the relatively solid Singapore money and inflationary rate stress can stimulate numerous citizens to redirect their retail spending overseas. “Prime retail rental development for 2025 is expected to ease and secure within a predicted range of between 1% and 3%,” he states.

Wong indicates that openings rates in the OCR increased slightly to 4.3% in 4Q2024, up from 4.2% in 4Q2023 yet still below the pre-pandemic 6.2% in 4Q2019, that shows a resilient suburban retail market. He includes: “Boosted connection and diverse retail products, consisting of life-style and eating alternatives, have actually improved suburban allure, bring in respected abroad F&B labels. 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.”

Altura EC Qingjian Realty

Moreover, the island-wide openings level in the retail property industry slipped 0.3% q-o-q to 6.2% in 4Q2024. This was mostly driven by declines in the vacancy rates in the Central Region (falling 0.4% q-o-q to 7.2%) and Outside Central Region (falling 0.3% q-o-q to 4.3%) previous quarter.

Net retail necessity 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.

Not just prime retail rooms in the Central Region have actually seen an uptick in demand. Net retail interest in the Outside Main Region (OCR) was 560,000 sq ft last year, about 4 times the 129,000 sq ft absorbed in 2023.

The descending trend in the island wide retail vacancy pace, which slipped for the 3rd successive quarter, underpinned resistant tenant interest amid a modest supply of retail room this year, says Phua.

Rental growth in Singapore’s retail real estate sector registered an annual increase of 0.5% for the whole of 2024, according to property statistics released by URA on Jan 24. This marks the 2nd constant year that the regional retail market has seen rental fees increase, after increasing 0.4% y-o-y in 2023.

Meanwhile, retail prices dipped 1.3% q-o-q in 4Q2024, nearly eliminating the quarterly rise of 1.7% that was recorded in 3Q2024. Nevertheless, retail prices finished 2024 with a rise of 1.0% y-o-y contrasted to the 1.2% y-o-y surge marked in 2023.

As an example, French sports brand name Salomon opened up outlets at Ngee Ann City and Orchard Central, while Finnish lifestyle brand Marimekko started its second site at Ngee Ann City after its 2023 launch at ION Orchard.

Looking ahead, the island-wide retail openings level is anticipated to continue to be tight this year, which need to support rental growth for prime retail places, says Phua. She adds that the market is going to be buoyed by continual domestic usage, a tighter labour market, and a positive tourism outlook in 2025.

She includes that new need for retail room was spearheaded by the entrance of new-to-market brands and the growth of occurring brands such as F&B, active lifestyle and sports, fashion labels, along with beauty and wellness labels.

” Merchants continue to integrate experiential elements into their bricks-and-mortar stores, to improve the purchasing experience and drive client engagement. Zara and Levi’s resumed at ION Orchard in 2024, with Zara releasing express in-store pick-up and Levi’s unveiled its very first Tailor Outlet,” claims Wong Xian Yang, head of study Singapore & SEA at Cushman & Wakefield.