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Prime retail rents are steadily recovering but have yet to return to pre-pandemic levels: CBRE

By Nur Hikmah Md Ali

/ EdgeProp Singapore |

December 1, 2023 12:22 PM SGT

CBRE: Prime retail rents have yet to recover to pre-pandemic levels, but are expected to continue recovering next year (Photo: Samuel Isaac Chua/EdgeProp Singapore).

SINGAPORE (EDGEPROP) - Prime retail rents are slowly recovering from the drastic decline in footfall due to Covid-19 restrictions, CBRE says in its latest report “Singapore Retail in the Post-Pandemic Era: Trends and Opportunities”, released on Nov 30.

The real estate consultancy’s report revealed that as of 3Q2023, prime retail rents are at 4.6% above the lowest point when rents reached a historical low of 10.6% in 2020 between 2018 and 2023.

The decline in 4Q2019 was largely due to lower shopper traffic and higher vacancy rates. These prime retailers are located across Orchard Road, City Hall, Marina Centre, CBD and city fringe submarkets. However, the suburban market remained resilient due to the sustained demand from their surrounding neighbourhoods.

CBRE’s head of retail Joan Chen notes that the decline in footfall due to Covid-19 restrictions led to a sharp decline in retail and F&B sales. “This resulted in closures, increased vacancies, and consequently lower rentals during the pandemic period,” Chen says, adding that consumers shifted to online shopping at that time.

The report expects consumers to increasingly use e-commerce but offline sales will still contribute to the majority of retail sales. This should prompt retailers to establish a complementary online presence to cater to consumers’ changing shopping habits.

The report also found that prime retail rents have been picking up since 3Q2022 but have not reached pre-pandemic levels of almost $28 psf per month. CBRE’s retail consulting lead in Asia Pacific Lim Mian says this is because most malls have yet to recover footfall to pre-pandemic levels.

Still, CBRE projects that retail rents will continue recovering next year due to two factors. Firstly, there will be more annual supply of new spaces. The head of research at CBRE Tricia Song, expects that the annual supply from 2023 to 2026 will be 0.48 million sq ft.

Secondly, the tourism sector is expected to recover fully next year, contributing to higher footfall in retail spaces. Song says: “This is supported by Singapore’s strength as a business and transit hub, as well as a robust pipeline of Mice and entertainment events. This should further fuel optimism and demand from retailers.”

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