Singapore’s 5-year retail supply pipeline from 2021 to 2025 halved

The annual average is only expected to hit 560,000 sq ft.

According to Savills estimates, the islandwide supply pipeline has been limited since 2020 with around 430,000 sq ft of retail net lettable area (NLA) slated to complete in 2021. 

The supply pipeline in the next few years remains limited with the five-year (2021 to 2025) annual average coming in at 560,000 sq ft, less than half the historical five-year (2016 to 2020) annual average supply of 1.3 million sq ft. 

“We expect to see a surge in completions in 2022 due to the accumulation of delayed projects. Among the 750,000 sq ft of retail NLA scheduled to complete in 2022, some notable developments include the revamped i12 Katong, One Holland Village and renovated Shaw Plaza,” the analyst said.

Here’s more from Savills:

Going forward, although crowd control and travel restrictions are tapering, they are likely to continue to weigh on the recovery of tourist arrivals, as well as retail and F&B services. Despite the high vaccination rate and recent relaxation of domestic and border restrictions, the pace of recovery is expected to remain muted as Singapore will halt any further easing of social measures alongside the global spread of the Omicron variant. As the border control and dine-in restrictions could remain in place, the retail and F&B services sectors are likely to remain lacklustre amid weak visitor arrivals.

While muted tourism and default work-from-home arrangements continue to drag on the sales performance in Orchard Area and Central Business District (CBD), some retailers have shifted tac and are targeting the suburban retail market. As convenience drives online grocery shopping, specialised grocers who provide a unique in-store shopping experience are here to stay. Following its slew of new openings across the island this year, Australian-based Scoop Wholefoods will expand to other areas with strong residential catchments such as i12 Katong and Waterway Point next year. 

The conventional wisdom today is that when travel restrictions are lifted, the retail and F&B industry will recover in leaps and bounds. However, we need to sound a note of caution that while recovery is the likely path it may not be uniform. Shops in the Orchard Road tourist belt and CBD may experience better tourist spend, but those in Suburban Area may have domestic consumption power diluted by outbound travel and greater numbers of workers returning to their place of work. 

Nevertheless, the downside is supported as the reality of living with sporadic flare ups of new variants takes root, footfall will recover. Add to this higher vaccination rates and better treatment and we believe that 2022 will see rents improve, starting with a 3% YoY rise in the prime suburban malls and an arrestment of the decline in the Orchard Road shopping belt.