How Singapore’s retail market is ‘running on two speeds’

The weak market sentiments continue to weigh on retail leasing demand.

In a recent report, Savills noted that Singapore’s retail space market is running on two speeds. The weak market sentiments continue to weigh on leasing demand for retail space, with islandwide retail vacancy increasing by 0.3 ppts QoQ to 7.1% in Q2/2025.

Here’s more from Savills:

In the Suburban Area where footfall and spending on essential items are stable, the vacancy rate remained stable at 5.2% in Q2 with steady take-up. In the Central Region, the retail trade has been less resilient to rising rents and business operational costs and this led to a weakening of demand for retail space.

Compared to Q1/2025, the vacancy rate in the Central Region went up by 0.6 ppts QoQ to 8.2% in Q2. Notably, the Downtown Core Planning Area and the Rest of Central Area saw slower take-up in Q2, with their occupied space shrinking by 75,000 sq ft each. Meanwhile, the vacancy rate in the Orchard and Fringe Area remained relatively flat due to limited supply.

Despite the overall lacklustre demand in the Central Region, the Urban Redevelopment Authority’s (URA) rental index in the Central Region rose by 0.9% QoQ in Q2, reversing a 0.5% QoQ decline in the previous quarter. The rental index in the Central Area and Fringe Area also saw a rebound in Q2, rising by 0.7% and 0.9% QoQ respectively. According to Savills’ basket of retail properties, the average monthly rent in the Orchard and Suburban Area also inched up by 0.5% QoQ to S$23.30 psf and 0.4% QoQ to S$14.80 psf respectively in Q2.