Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The mostly stale leas adhere to mixed retail sales performance in 1Q2024. Whilst data from the Singapore Department of Statistics presented retail sales omitting car reviving from a year-end depression to strike $4 billion in January on the back of Chinese New Year festivities, it ultimately fell to $3.2 billion in February before climbing back up to $4.2 billion in March.
At the same time, the F&B scene has observed an increased rate of eateries setting up and shutting down, adds the Knight Frank information. In 1Q2025, F&B brand names including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, while hotpot chain Haidilao closed two outlets.
Prime retail spaces in the Marina Centre, City Hall and Bugis spots equated at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents dipped 0.3% q-o-q to $24 psf pm. Suburban prime retail rents averaged $26.80 psf pm, up 0.3% q-o-q.
The rapid entries and exits of F&B brands could indicate an indication of overgrowth and the demand for intervention to stabilise the marketplace, claims Knight Frank. “The dining scene seems getting to oversupplied amounts, and measures to cool the market for a sustainable sector might be required earlier instead of later on,” says Ethan Hsu, head of retail at Knight Frank Singapore.
Possible measures consist of restricting the amount of F&B permits provided within a specific location, capping the proportion of net lettable location allocated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax on F&B chains that expand past a specific range of outlets within a designated period. “These can all work as a call for F&B drivers not to bite off more than they can chew and spread out the development of F&B to an extra reasonable and lasting pace,” includes Hsu.
Singapore prime retail rents remained mainly flat in 1Q2025 amidst a retail setting that continues to deal with increasing operating expense and labor constraints, claims Knight Frank Singapore. According to a research record released by the firm in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
Offered the persistent high-cost atmosphere and the increasingly competitive F&B scene, the outlook for the retail stays challenging, says Knight Frank. In addition, sweeping tariffs introduced by US Head of state Donald Trump can pull down business sentiment. “For a smaller trading nation like Singapore, this could have far-ranging impacts that could undermine [Knight Frank’s] delicate 1% to 3% progress projection of prime retail leas in 2025,” states Hsu.
Mentioning information from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank observes that a total amount of 3,047 F&B businesses shut down in 2024– the top figure since 2005. On the other hand, 3,793 F&B businesses were formed the similar year, the second-highest number ever since 3,934 beginnings in 2021.
