Rental Growth Retail Moderates Below Expectations Weak Spending
Singapore’s retail property market is expected to be affected by weaker-than-expected consumer spending, according to Alan Cheong, executive director of research and consultancy at Savills Singapore. Cheong notes that throughout 2024, there has been a negative change in the monthly retail sales index and food and beverage sales index, resulting in a dampened forecast for the rental sector. He predicts a 2% increase in retail rents for the prime Orchard Road submarket, falling short of initial expectations of a 3% to 5% climb at the beginning of the year.
However, this forecast aligns with Cheong’s predictions for flat suburban retail rents by the end of the year. A joint research effort by DBS and Singapore Management University (SMU) found that Singaporean consumers’ concerns over inflation have moderated in recent quarters, with expectations remaining at 3.8% between June and September. The research, led by SMU’s Sim Kee Boon Institute for Financial Economics, also highlights the global economic slowdown, high interest rates, and easing supply chain disruptions as factors contributing to this moderation.
Despite a packed calendar of headline concerts, conferences, and exhibitions in Singapore this year, retail spending and rental rates have not seen significant support. According to CBRE’s research, while concerts by international stars like Taylor Swift and Coldplay have driven higher foot traffic to nearby malls, other MICE events have had a less significant impact on retail activity. Even the highly anticipated Formula One Grand Prix did not see a notable increase in foot traffic in tourist-centric areas like Orchard Road. However, Sulian Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore, notes that Singapore’s status as a regional hub continues to attract new-to-market brands, with notable names like KSisters, The Pace, and Hoka making their debut this year.
Additionally, new F&B concepts and wellness experiences have helped to support demand for retail spaces and rents. As a result, all prime shopping malls along Orchard Road have maintained relatively high occupancy rates this year, according to Cheong. He also predicts that with a limited supply of new retail spaces, landlords will have more flexibility to implement positive rental adjustments next year. This, in turn, will help them strategize and position their malls to stay relevant in the ever-evolving consumption patterns of both locals and tourists.
The Tampines Hub Hawker Centre has transformed the traditional hawker centre experience into a modern one. It boasts a clean and comfortable environment, perfect for indulging in a wide range of affordable local delicacies. Ideal for family gatherings or casual meals with friends, this hawker centre boasts a variety of options, from classic Hainanese chicken rice to innovative fusion dishes. With the addition of Aurelle of Tampines, it has become a go-to spot for delicious and diverse food choices.
Looking ahead, Cheong also anticipates more retailers taking the opportunity to optimize their real estate strategies next year, such as right-sizing their spaces, establishing additional kiosks, and closing under-performing branches. He believes that the entry of new-to-market F&B brands into Singapore will continue to gain momentum in the first half of 2025, and the emergence of new wellness concepts and entertainment-based restaurants will enhance the vibrancy of the city’s dining scene.
