Singapore retail rents to increase by up to 2% this year

Thanks to recovering tourist arrivals driving retail consumption.

In a recent report, Savills said Singapore’s economy is expected to see subdued growth in the second half of the year, underpinned by the uncertainties arising from the Liberation Day tariffs and a tapering of non-oil domestic exports after businesses front loaded their exports to beat potentially higher tariffs. 

This could spill over into domestic-oriented sectors such as retail and F&B, which have reported muted performance in the first half of the year.

Here’s more from Savills:

Although the distribution of government consumption vouchers (CDC and SG60) could help to lift the retail sales activity, overall retail sales in the next few months are forecast to head sideways due to similar performances in economic numbers and cautious hiring sentiments. The recent signs of a softening in resident employment could also further dampen the spending power in Singapore while strong Singapore currency continues to divert spending aboard for value products.

Although the tapering supply pipeline is likely to lend some support to the occupancy and rents in the next two years, the overall market sentiments remain cautious as hiring and spending activities are expected to remain subdued. While stable footfall and essential purchases are expected to support the performance of suburban malls, malls in the Central Region could continue to face pressure from weaker spending power in the current economic climate.

Going forward, Savills expect higher tenant turnover rate as underperforming stores vacate. While prime units will usually soon get filled up by new tenants, landlords may have to offer shorter leases or more attractive rental incentives to keep the less prime units occupied.

Suburban malls with strong connectivity to transport hubs and serving a large pool of residents in public and private housing would be insulated from the challenges facing the general industry. With tourist arrivals coming back into growth territory, Orchard Road malls would continue to see rental increases. For 2025, we expect both Orchard Road and Suburban mall rents to rise by up to 2%.