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

Rents for Singapore commercial property owners will increase in 2023 from prior lows of the pandemic. The reason behind this is the return of tourists as well as domestic spending.

Market watchers believe that while the pressures of inflation and an increase in Goods and Services Tax might have a short-term impact on rents and retail sales however, they will not dampen them.

Rents for prime retail spaces will increase by 1.5 to 4.1 percent in 2023. The strong performance of the Orchard Road and Downtown sub-markets is a major reason behind this.

Retail space rents are increasing due to the growing demand for shopping malls in Tier 1 like Ion Orchard and Nex, as well as the higher rate of inflation.

Due to the recovery of 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 costs are increasing.

Retail sales increased for eight consecutive months between February 2023 and September 2023 before dipping in October. The retail sales for November were valued at S$4.1 billion, according to Department of Statistics.

Food and beverage will still remain the primary reason for new mall openings by 2023. The sector will account for the majority of openings. Beauty, fashion and wellness were the next most popular openings.

Singapore’s foreign visitor arrivals during November fell for the fourth consecutive month at 1.1m however, they were still higher than the 816,340 who visited Singapore in the month of November 2022. In November of 2019, there were 1.5 million tourist arrivals prior to the pandemic.

Analysts expect that the momentum of tourism spending will continue, and Orchard Road rentals to rise. However, downside risks still exist.

By 2024, tourism is expected to fully recover by 2024. The price of lodging and transport for tourists could be pushed up by the high rate of inflation as well as rising oil prices.

In light of the current macroeconomic situation travellers may be more careful with the plans for travel and spending.

The strength of the Singapore Dollar is driving Singaporeans to travel internationally, but the buying power of tourists will be limited.


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The retail sales of stores have been impacted due to the increase in GST and inflation.

Analysts believe that plans to revive Orchard Road and make it an ideal destination for leisure in the near future will raise rents and prices.

Orchard Road properties are attracting more attention. Tanglin Shopping Centre was sold in 2022 for $868 million, and Far East Shopping Centre went for S$908 million. Scotts Square is also for auction at S$450 million.

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

Strata-malls are often a mishmash of ideas due to the owners who run their own retail and F&B concept as well as the ones who rent their premises based on rental rates without considering enough about concept types or trade synchronicity.

These malls will benefit from a redesign of their positioning and strategy in order to provide a better shopping experience for customers and to draw in the younger generation.

Rents are predicted to increase by 3 to 5 percent each year in Orchard Road.

Rents in suburbs will likely remain flat as inflation and outbound travel reduce demand in the middle regions.

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

This is smaller than the 1.2m square feet of NLA completed in the year of 2019. This figure is greater than the 443,473 square feet NLA retail space that was finished in 2022, and is comparable to 599.549 square feet NLA in 2020.

It is not likely to see a major retail shortage by 2024. This won’t have an impact on the retail rents in the current year.

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

The retail inventory that will be added by 2024 is still less than the average annual volume of 0.62 million sq ft in the past five years, which should support rents in the year 2019.

She stated that she was expecting the value of capital to increase in 2024.

URA data show that retail space prices in the Central Region have recovered by 0.9 percent from the Q1 low. In Q3 the prices were 26 percent lower than their peak levels from Q4 2014.

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