Is the worst finally over for Singapore retail rents?
Q1 prime rents in the Orchard and Suburban areas increased 0.4% and 0.5%, respectively.
Singapore prime retail rents are showing signs of holding up, although retailers are still cautious and uncertain about the pace of recovery. Most offices are still on a hybrid work setup so footfall in the Central Business District has yet to return to pre-COVID levels.
According to Savills, the slow return of human traffic could also have contributed to some retail space being vacated, for example, The Assembly at Raffles City.
Here’s more from Savills:
Meanwhile, the hitherto thriving suburban market started to lose steam and recorded a decline in demand, leading to a negative absorption of retail space (-129,000 sq ft), the first since Q3/2020. This is attributed to a marginal increase in the islandwide retail vacancy to 8.3% in Q1/2022, up from 8.1% in Q4/2021.
According to the Urban Redevelopment Authority (URA), its retail rental index for the Central Region fell by 0.4% QoQ after registering a short-lived recovery in the previous quarter. Although the social distancing measures and border restrictions could have dampened overall rental growth, prime retail rents are showing signs of stabilising after a two-year decline.
Considering that sales and tourism numbers have been improving, some retailers are regaining confidence that the worst is finally over. Savills monthly prime rents in the Orchard Area increased by 0.4% QoQ to S$21.00 psf, while in the Suburban Areas, they rose by 0.5% QoQ to S$22.90 psf.
New additions in Orchard
As tourism recovers in line with the reopening of borders, business sentiment and consumer confidence have improved. Some retailers are seizing the opportunity to expand their footprint when prime space becomes available. This is especially so in prime locations along the Orchard Road tourist shopping belt. ION Orchard will house Christian Dior’s first standalone facial boutique in Asia, Dior Prestige La Suite.
New brands which have entered that market include South Korean skincare brands The History of Whoo and Su:m37, and home-grown jewellery store By Invite Only. Puma will launch its first Southeast Asia flagship store at 313@Somerset. Other additions include Japanese eatery Ohayo Mama San and drink kiosk Super Coconut.
According to Savills estimates, the island-wide supply pipeline in the next few years remains limited with the five-year (2022 to 2026) annual average coming in at 524,000 sq ft. This is almost half the historical five-year (2017 to 2021) annual average of 1.0 million sq ft. Among the 482,000 sq ft of net lettable area (NLA) scheduled to complete by 2022, some notable developments include One Holland Village and the renovated Shaw Plaza.