Prime retail rents on Orchard Road rise 4.1% in 2023, eighth highest globally: Savills

The report by Savills points out that prime rents in some core luxury destinations were still below pre-pandemic levels, especially among relatively large and higher-value markets like Singapore, New York, Hong Kong and London.

According to a global luxury retail market report published by Savills, Singapore’s prime retail sector along Orchard Road, a popular shopping destination, was one of eight international luxury retail locations that experienced an increase in headline prime rents in 2023.

The consultancy reported that headline prime rents along Orchard Road increased by 4.1%. At the top of the chart was Toronto’s Bloor Street, where prime retail rents surged 16% last year, followed by New York’s Madison Avenue which increased 9.5%.

Other luxury retail locations that saw increased prime retail rents were Amsterdam’s PC Hooftstraat, Milan’s V Monte Napoleone, Madrid’s Ortega y Gasset, Hong Kong’s Canton Road (4.3%) and Berlin’s Kurfurstendamm. Singapore’s Orchard Road took eighth place on the list.

These locations, which recorded an increase in prime retail rents, were buoyed by reduced availability of luxury retail spaces and improved occupier demand, says Marie Hickey, director of commercial research at Savills.

However, she notes that prime rents in some core luxury destinations were still below pre-pandemic levels, especially among relatively large and higher-value markets like Singapore, New York, Hong Kong and London.

Research by Savills points out that prime retail rents in Singapore in 4Q2023 are still 23% less compared to 4Q2019 before the pandemic. “This difference continued to support leasing appetite, subject to the quality of the space and market dynamics. However, the rental value spread seemed to be diminishing as a further upward pressure on rents is expected across a range of locations in 2024, albeit at a slower rate than seen previously,” says Hickey.

She adds that brands continue to “shed marginal stores and upsize their best ones. Single-storied shops were now moving to duplexes, often with a triplex façade which would ensure that the top luxury brands were a standout to their customers”.

This is visible on Canton Road in Hong Kong, where a wall of branded luxury facades is along the Harbour City side of the street. Meanwhile, Marina Bay Sands in Singapore also demonstrates this trend, says Hickey.

Sulian Tan-Wijaya, executive director, retail and lifestyle, Savills Singapore, comments that Singapore is not short of affluent consumers. “The number of new luxury store openings would be constrained not by the shortage of big spenders, but rather the current scarcity of real estate for new luxury stores,” she says.

She adds that there has been strong interest among luxury watch and jewellery brands wanting to expand in Singapore with new standalone experiential concepts that cater to their top-tier customers.

“Currently, there are only so few high-end malls in Singapore, some brands could wait years before they finally get into a mall of their choice, not because the mall doesn’t want them, but because many incumbent big brands won’t want to move out,” adds Tan-Wijaya.