Singapore Orchard Road retail rents to rise by up to 5% this year

Meanwhile, average rents in the suburbs are forecast to remain stable.

According to a recent Savills report, the continued recovery in air travel and tourism demand should support growth in Singapore’s tourism related sectors. 

For retail, the main beneficiaries will be shops and F&B establishments along Orchard Road and the CBD. Nonetheless, overall, the pace of growth for most of the sectors is set to ease from 2023. 

Here’s more from Savills:

Although the tourism recovery could be driven by improved global flight connectivity and capacity, as well as the mutual 30-day visa exemption between Singapore and China, Singapore’s tourism numbers in 2024 are likely to remain below pre-COVID levels. In the face of geopolitical and economic uncertainties, travel sentiment and the global travel recovery could also weaken. 

Meanwhile, the strong Singapore dollar and high prices are encouraging locals to spend overseas, exerting further pressure on retail and F&B sales this year. This will affect the Fringe and Suburban retail and F&B establishments more than those along Orchard Road and in the CBD. 

Although occupier demand for retail space may soften as sluggish domestic consumption impedes sales growth and thus dampens some retailers’ expansion plans, retail rents are projected to stay firm. Landlords’ rental expectations are likely to rise alongside higher property operating costs, especially for malls with healthy footfall and excellent accessibility. The wages of security guards, maintenance crews and even administrative staff have gone up substantially. 

As the continued recovery in tourist arrivals and spending helps to support rents in the tourist shopping belts, average rents on Orchard Road are expected to rise by around 3% to 5% YoY in 2024. Meanwhile, average rents in the suburbs are expected to stay flat this year, as cost push inflation is offset by weaker domestic spending due to outbound travel and weak real wage growth.