Rental growth in retail moderates below expectations from weak spending
The research study, led by SMU’s Sim Kee Boon Institute for Financial Economics (SKBI), also found that a lot of Singaporeans who expect inflation to secure in the coming quarters attribute this to the international economic downturn, high interest rates and the prospective easing of supply chain disruptions.
She includes that many new F&B principles were even introduced, including Sushi Samba and coffee groups like Blue Bottle, Grey Box and Puzzle Coffee. New restaurant concepts with entertainment, like Centre of the Universe, just started in the CBD area, while an additional new player, Rasa, is set to open up in December, also in the CBD.
Cheong says a much more favorable result for the retail market would certainly be a circumstance where customer spending is keeping pace with rising cost of living. “Nonetheless, the reality that it has been relatively reduced indicates that it could lead to financial challenges to businesses in the market”.
While shows commonly drive higher foot visitor traffic to neighboring malls such as Kallang Wave Shopping Center and Leisure Park Kallang– both situated close to the National Stadium and Singapore Indoor Arena– other MICE (meetings, incentives, conferences, and shows) events have not had a similar impact on retail activity, observes CBRE Research.
Cheong projections that retail properties in the prime Orchard Road submarket might see a 2% boost in leas within the complete year. This forecast drops partially except expectations at the start of this year when Savills anticipated prime Orchard Road rents to climb up by 3% to 5%.
Likewise, he prepares for that even more retailers will take the opportunity next year to optimise their realty techniques. This could include right-sizing their spaces, developing additional stands, closing under-performing branches, or shifting cooking operations to central kitchen areas.
“Singapore continues to be an attractive location for new-to-market brands going into the area, extending retail, F&B, and some other lifestyle ideas,” claims Savills’ Tan-Wijaya. She includes that these new participants have actually boosted need for retail spaces and sustained rental development, particularly in main Singapore.
At the same time, customer spending information released by the Singapore Department of Statistics earlier this month reveal that retail sales (excluding automobile) boosted 0.3% y-o-y in October, reversing the 1.5% y-o-y decline recorded in September.
Still, Sulian Tan-Wijaya, executive supervisor of retail and lifestyle at Savills Singapore, states Singapore’s premier condition as a regional hub continued to attract significant new-to-market brand names.
“There is strong momentum in the access of new-to-market F&B brand names right into Singapore, and this trend is expected to continue with at least the first half of 2025,” states Cheong.
However, Cheong expects country retail leas to continue to be standard via the end of the year, that is in line with his initial rental forecast for this section.
Tan-Wijaya likewise observes the appearance of brand-new wellness approaches and restaurants giving leisure, that are expected to boost the dynamics of Singapore’s food scene.
Singapore also hosted various recreation and business events, involving the Formula One Grand Prix, the 25th World Congress of Dermatology, The Meetings Show Asia Pacific, NRF 2024 and ART SG.
“Some notable retailers that started in Singapore this year consist of KSisters, The Pace, Brands for Less and Hoka. The wellness industry is likewise advancing with new concepts like Rekoop and Hideaway,” she states.
According to research study collectively released by DBS and Singapore Management University (SMU), customer concerns over higher-than-expected inflation have mostly moderated in current quarters. In Between June and September, Singaporean consumers’ headline rising cost of living expectations continued to be at 3.8%.
Performances by worldwide headliners were a significant highlight this year, with distinguished artists like Taylor Swift, Blackpink, Coldplay, and Westlife performing in Singapore. The Monetary Authority of Singapore estimates that over fifty percent of the 500,000 participants at Taylor Swift and Coldplay concerts were immigrants, contributing between $350 million and $450 million in tourism invoices.
Retail landlords may have more versatility next year to apply positive rental changes, as the source of brand-new retail spaces comes to be more minimal. “This will allow them to strategise and position their shopping malls to continue to be relevant in the quickly developing usage patterns of both locals and vacationers,” states Savills’ Cheong.
CBRE observed that business occasion attendees tend to remain exclusively at the event venue. In fact, the F1 race, one of Singapore’s most famous global activities, saw reduced tourist foot traffic in close-by shopping malls before and during the race weekend. Whilst the race generates an annual standard of $125 million in tourist receipts, it has not dramatically raised foot traffic in tourist-centric locations like Orchard Road.
As a result, all the top mall near Orchard Road enjoyed reasonably high tenancy rates this year, as retail businesses have solid confidence in the retail market, says Savills’ Cheong.
Regardless of a jam-packed timetable of headline concerts, conferences and exhibitions in Singapore this year, retail spending and rental rates viewed minimal support. CBRE’s research, released late last month, highlighted that the footfall produced by these events had a nuanced impact on bordering shopping centers.
Weaker-than-expected consumer expenditures is set to dampen rental forecasts for Singapore’s retail real property market by the end of the year.
Alan Cheong, executive supervisor of research and consultancy at Savills Singapore, claims consumer shopping in 2024 has been relatively weak and points out that the y-o-y change in the monthly retail sales index (excluding motor vehicles) and food and beverage (F&B) sales index has actually thus far been mostly negative all throughout a lot of this year.
