Singapore retail absorption hits 10-year high of 1.2m sq ft in 2024

All regions recorded positive net demand during the year.

According to a recent Savills report, notwithstanding the subdued retail spending, market sentiments improved on the back of tourism recovery.

“Compared with Singapore’s three-year historical annual average net demand of 958,000 sq ft, 2024 marked a total net absorption of over 1.2 million sq ft, which is also the highest in the last decade,” the report said.

Here’s more from Savills:

For the whole of 2024, all regions recorded positive net demand, with the Downtown Core Planning Area outperforming the rest. The vacancies in the Orchard Planning Area and Rest of Central Area also fell to a record low in the last five to six years alongside an improved take-up and tight supply.

Notably, the higher demand in the Downtown Core and Orchard Planning Area could be driven by the arrival of new foreign brands as the tourism recovery bolstered retailers’ confidence level. As a result, the retail islandwide vacancy rate continues to ease for four consecutive years, falling from 6.5% in Q4/2023 to a ten-year low at 6.2% in Q4/2024.

Owing to the continuing recovering in inbound visitors, demand for retail space in tourist areas remained strong. Consequently, the positive pressure on rents in the Central Area did not subside in 2024.

According to the Urban Redevelopment Authority’s (URA) rental index data, rents in the Central Area increased at a faster pace of 1.0% YoY in Q4/2024 while those in the Fringe Area fell by 1.0% YoY. Savills’ retail rents showed a similar trend, with the average monthly rent in the Orchard Area rising by 2.3% YoY to S$23.20 per sq ft in Q4/2024.

The average retail passing rent in Savills’ basket of retail properties in the Suburban Area fell marginally by 0.1% YoY to S$14.70 per sq ft over the same period.