Retail space rental rates are expected to continue to increase by 2024

The rents paid by Singapore commercial property owners will rise in 2023 from the previously low levels of the pandemic. The reason was the return of tourists and domestic spending.

Market watchers say that while the pressures of inflation and an increase in Goods and Services Tax might affect the short-term performance of retail sales and rents, they are unlikely to reduce them.

Rents for prime retail spaces will rise by 1.5 to 4.1 percent in 2023. The impressive growth of Orchard Road and Downtown sub-markets is the reason for this.

Retail rents are increasing due to the increased demand for Tier-1shopping malls like Ion Orchard or Nex and higher inflation.

Because of the rebound in the tourism industry and sales of revenge Tenant sales in Tier-1 malls are now more than they were prior to Covid. Rents are rising, and property prices are increasing.

Retail sales increased for eight months from February 2023 to September 2023, but then fell in October. Retail sales in November were estimated at S$4.1 billion, according the Department of Statistics.

Food and drink will continue to remain the primary reason for new malls opening in 2023. This sector will represent 48 percent of all new openings. Beauty, fashion and wellness, in addition to lifestyle were the second most popular mall openings.

Singapore’s foreign visitors arrivals in November decreased for the fourth consecutive month down to 1.1m but they were still more than the 816,340 who visited Singapore in the month of November 2022. Before the pandemic, 1.5 million tourists visited Singapore in November 2019.

Analysts believe that the current trend of spending on tourism will continue and Orchard Road rentals to rise. However, downside risks still exist.

Tourism is expected to completely improve by 2024. The rising cost of oil and the rise in inflation costs could raise the price of transportation and accommodation for tourists.

Travelers could tighten their purses and be more cautious with their spending and travel plans due to the macroeconomic situation.

The strength of the Singapore Dollar is driving Singaporeans to travel overseas, but the buying power of travelers will be restricted.


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The retail market is being impacted by the rise in inflation and to some extent it has been impacted by the GST rise.

Analysts believe that plans to rejuvenate Orchard Road and make it a lifestyle destination in the near future will increase prices and rents.

Orchard Road property is attracting more attention. Tanglin Shopping Centre was sold in 2022 for $868 million, while Far East Shopping Centre went for S$908 million. Scotts Square is also for sale for S$450 million.

Redevelopment of buildings that were once abandoned along Orchard Road can bring new retail space that could attract tenants and fetch higher rents. These stretches could also transform into areas that are more prominent and vibrant with increased pedestrian circulation.

The strata-malls are often an assortment of different concepts due to owners operating their own retail and F&B concepts as and the owners who lease their properties in accordance with rental rates, but without sufficient thought given to concept types or trade synergies.

The malls can benefit from a rethinking of their location and strategy to provide a more comprehensive shopping experience to customers and attract the younger generations.

Orchard Road is expected to have rents rise between 3 and 5 percent per year.

Rents in suburbs are expected to remain stable due to the fact that the rise in inflation and travel abroad reduce consumption.

According to URA information, a total of 570,000 square feet, net lettable (NLA) of retail space is anticipated to be added by 2024.

It is lower than the 1.2m square feet of NLA completed in 2019. This is more than the 443,473 square feet NLA retail space that was completed in 2022. It is similar to 599.549 square feet NLA in 2020.

The chance of having a retail oversupply in 2024 is very low and won’t affect retail rents this year.

The expected completion date for Pasir Ris Mall in 2024 will be approximately 280,000 square feet. Labrador Tower will also be having a smaller retail component, estimated at around 30,000 sq ft NLA.

Rents should be bolstered by supply of retail which is expected to grow until 2024, but is still below the average annual amount (0.62 million sq ft) in the past five years.

She added that she expects the capital value to increase in 2024.

URA data shows prices for retail stores in the Central Region has recovered by 0.9 percent since the Q1 low. In Q3 prices were lower by 26 percent than the levels they reached in Q4 2014.

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