Singapore CBD retail rents down 4.8% in the first nine months of 2021

Island-wide prime retail rents slipped 1.9% QoQ to S$25.70 psf pm in Q3.

Across the world, the retail property sector has been one of the hardest hit by the pandemic. In Singapore, Knight Frank says as hopes for leisure travel remain tentative given that only selected Vaccinated Travel Lanes (VTLs) have been established, many resorted to new activities or new places to explore in Singapore in search of escape from a pandemic inhibited routine. 

“In order to create diversity and convenience for walk-in consumers, multipurpose retail has been trending of late, as landlords and retailers alike adopt a one-location shopping strategy. Hypermarkets like Fairprice Xtra at Parkway Parade and VivoCity are designed to include a plethora of consumer choices ranging from normal grocery shopping to food stalls as well as a cocktail bar with seating areas. In similar fashion, some boutiques took on multiple-labels while other shops included F&B concepts among their displayed goods.”

Here’s more from Knight Frank:

In Q3 2021, island-wide prime retail rents declined 1.9% quarter-on-quarter (q-o-q) or 6.1% y-o-y to S$25.70 psf pm, bringing the total change in rentals in the first nine months of the year to a negative 4.8%. The reduction in the third quarter was primarily driven by the fall in the average gross rent of prime retail spaces in the Marina Centre, City Hall, and Bugis regions as many workers resumed working-from-home due to stricter measures that were back in place, causing yet another episode of declining footfalls. 

While measures are again enacted to contain the sudden wave of infections, the Singapore government is resolute with its vision for the country to transit towards endemic living. If there are no further disruptions to the retail market in the last quarter of the year, average gross rents of prime retail rents in the CBD area might start to bottom out.

Market outlook

After almost two years since the outbreak of the COVID-19 pandemic, there are now signs that the retail sector could stabilise soon without further disruptions and recovery could gain traction. Although full recovery of the retail market remains uncertain and tentative, we foresee the pace of rental declines slowing down. Barring any recurring implementation of stricter measures in the remaining three months of the year, and with the prospect of more vaccinated travel lanes, the retail sector is poised to make a gradual recovery in 2022