Cost pressures to raise retail sales revenue, advertising costs in 2023

Savills said the rents will move up for prime retail and suburban rents.

Inflationary pressures will uptick the retail sales revenue and increase conservancy and advertising costs next year, Savills Research showed.

“These factors are expected to override the softer economic conditions and ultimately lift rents marginally,” said Savills.

It expects prime Orchard retail rents will move up to 1% to 2% year-on-year (YoY) and prime suburban rents to increase 2% to 3% YoY.

The retail market in Singapore is undergoing significant changes as landlords raise rental expectations and some tenants struggle with rising operating costs. 

As a result, some retailers may be forced to close or move to less prime locations, while the vacated space will be filled by more successful retailers or new entrants willing to meet the higher rental expectations. 

One example of this is the planned relocation of luxury carmaker Porsche's showroom from Leng Kee Road to the more central and visible location of Guoco Midtown in 2023.