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Prime retail rents in Singapore up 1.2% q-o-q in 1Q2023: Knight Frank

By Jennifer Venkat

/ EdgeProp Singapore |

April 20, 2023 6:17 PM SGT

Shoppers at Orchard Road. (Photo: Albert Chua/EdgeProp Singapore)

SINGAPORE (EDGEPROP) - Singapore retail rents continued to pick up in 1Q2023 amid the ongoing recovery in the tourism sector. According to a report by Knight Frank, gross rent of prime spaces island-wide averaged $26.40 psf per month (psf pm) in 1Q2023, up 1.2% q-o-q and 5% y-o-y.

The growth follows a recovery in the tourism sector post-pandemic. More borders in Asia have reopened in the last year, with Singapore welcoming tourists from previously closed countries. According to statistics by the Singapore Tourism Board (STB), Singapore welcomed more than 2.9 million visitors in 1Q2023. Although these numbers constitute only two-thirds of what they were before the pandemic (4.7 million visitors), the average stay of visitors to Singapore increased from an average of 3.34 days in 2019 to 3.97 days in the earlier part of 2023.

The steady increase in tourist numbers continue to boost recovery in retail real estate rents, especially in the prime Orchard Road shopping strip, says Ethan Hsu, Knight Frank Singapore’s head of retail. The Orchard area saw a growth in retail rents of 1.4% q-o-q and 5.2% y-o-y in 1Q2023.

Similarly, prime retail rents in the Marina Centre, City Hall and Bugis area rose 1.3% q-o-q and 5.2% y-o-y to reach $24.20 psf pm, while retails rents in the City Fringe grew 1.4% q-o-q and 4.4% y-o-y to reach $22.60 psf pm. Rents in suburban malls also remained stable, inching up 0.6% q-o-q to $26.20 psf pm, or 3.6% higher y-o-y.

The uptick in retail rental rates come despite an 18.7% m-o-m fall in retail sales (excluding motor vehicles) in February to $3.1 billion, marking a second consecutive month of decline. The fall could signify an end to “revenge spending” by consumers in the Christmas and Chinese New Year festive periods, Knight Frank’s Hsu notes.

In addition, consumers became more conservative due to inflationary pressures affecting non-discretionary spending. As such, the retail sales index decreased 12% m-o-m in January and 19.0% m-o-m in February. Nonetheless, retail sales volume remained above levels recorded during the pandemic and was slightly higher than pre-pandemic sales volume recorded in February 2019.

Knight Frank’s report highlights that as Singapore’s retail sector strengthens, consumers continue to gravitate towards experiential retail and lifestyle concepts. Singapore’s profile as a safe destination that attracts private wealth has also led to international luxury brands opening new stores in the city-state since 2H2022, including Giuseppe Zanotti, Grand Seiko and Atelier Cologne. There have also been a number of new F&B entrants such as Unatoto, Takagi Coffee, Hanazen, Luckin Coffee and Tim Hortons. Meanwhile, Hong Kong’s cosmetics chain Sasa has announced its plans to return to Singapore despite closing its 22 outlets in the city-state three years ago.

Going forward, the retail sector in Singapore is expected to continue recovering and growing as air travel and visitor arrivals near pre-pandemic levels. According to STB’s estimates, 12 to 14 million tourist arrivals are expected in 2023.

Despite headwinds including inflation, economic uncertainty and the upward revision of the goods and services tax, the sector’s recovery should continue to support retail rents. “As recovery appears firmly entrenched together with a prevailing cautious optimism in the post-pandemic retail scene, prime retail rents are anticipated to register moderate gains of between 3% and 5% in 2023,” Hsu predicts.

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