Market report: Positive outlook for retail, slower growth for sheds

Retail rents likely to keep the nine-quarter winning streak going.

Singapore’s retail property market is expected to continue growing this year on the back of a robust tourism rebound as well as a resilient domestic consumer market, according to JLL. 

In its latest property market monitor, JLL said the city-state’s reputation as Asia’s safe haven will also help support the retail sector’s expansion this year. 

“Amid a falling vacancy outlook, rents are expected to extend growth into 2024,” it said. 

Prime retail rents across the country’s three sub-markets have been steadily growing for the past nine quarters, with the latest data showing a 0.2% quarterly uptick in the final three months of 2023 thanks to lower vacancy rates.

The property agency said some retailers continued to expand their presence as part of their long-term strategies, despite softening consumer demand. 

Capital values of prime retail space remained flat across the board last quarter due to elevated operational costs, but JLL still expects a brighter year ahead for retail asset owners.

“A positive rent growth outlook, scarcity of quality retail properties, growing investor interest and capital allocation towards retail assets should, in turn, underpin capital value growth in 2024,” it said.

READ MORE: Stronger year ahead seen for retail S-REITs on Singapore tourism rebound

JLL noted that tourists continued to flock to the Lion City with the total number of arrivals climbing to 12.4 million for the 11 months through November 2023.

For industrial real estate, the property agency expects the sector to continue growing this year albeit at a muted pace as the market reels from the impact of high borrowing costs.

Both rents and capital values of logistics and warehouses across the city-state rose for the 11th straight quarter in the fourth quarter, thanks to limited available space and healthy buying demand.

“The foreseen tight vacancy and sustained buying demand for logistics/warehouse assets should keep rents and capital values on an uptrend, but the effects of occupier rent-hike resistance and the higher-for-longer interest rate outlook will likely slow the pace of growth in 2024,” it explained.