Two Tiered Retail Market 2Q2024 Central Region Rents Staying Flat
5 insights from LG Household & Health Care’s new retail store at One Raffles Place
URA’s data for 2Q2024 revealed that retail space rents in the Central Region remained stagnant after a 0.4% quarter-on-quarter decrease in the previous quarter. According to Tricia Song, CBRE’s head of research for Southeast Asia, the retail market remains divided in 2Q2024, with weaker leasing demand in secondary locations and strong demand in prime spaces. Prime floor rents islandwide rose by 1.1% quarter-on-quarter, continuing the previous quarter’s 1.0% rise.
According to an announcement by Guoco Group, a Hong Kong-based company that holds a majority stake of 66.8% in GuocoLand, a new partnership will be responsible for promoting the sale of residential units and leasing a childhood development center. This partnership will also play a crucial role in marketing Tampines North EC, a residential development project.
F&B continues to be a major driver for demand in prime retail space, with brands like Na Oh Korean restaurant partnering with Hyundai Motor Group and Alchemist & Arcade, a coffee-and-fashion company. Beauty & health brands like Novela, Jungsaemmool, and fashion brands like Parisian boutique Clémence by Rue Madame and Chinese brand shoe store Vivaia also expanded their presence in the market.
The 2Q2024 results show positive net absorption in the private retail sector for the third consecutive quarter, with around 388,000 sq ft of occupied space. The net absorption rate for the overall Central Region remained steady at 7.7% in 2Q2024, with a decrease of 0.7 percentage points in the Rest of Central Area’s vacancy rate. All submarkets saw positive net absorption, with the Outside Central Region (OCR) and Rest of Central Regions (RCR) performing well in the quarter. OCR saw an increase of around 237,000 sq ft of occupied space and a vacancy rate of 4.6% in 2Q2024.
The vacancy rate for retail space on Orchard Road rose from 6.6% to 6.7% in 2Q2024 due to a small increase in new supply and no net absorption. Angelia Phua, JLL’s consulting director of research and consultancy, attributes this increase to the moderated supply pipeline and firm occupier demand. The vacancy rate is expected to decrease for the rest of 2024, and JLL forecasts a 1.5% to 2.5% y-o-y growth in prime floor rents in 2024. Wong Xian Yang, C&W’s head of research for Southeast Asia, states that most of the new retail supply between 2H2024 and 2028 is expected to come from the Orchard area, accounting for only 9% or about 150,000 sq ft. With the retail component of the renovated Grand Hyatt Hotel Singapore and the redevelopment of The Cathay expected to be completed in 2024 and the redevelopment of Faber House set to open in 2026, Wong’s forecast bodes well for the prime retail market in the area.
