Orchard retail rents to drop up to 4% in 2024: Savills

This decline will be due to labour supply issues and rising operating costs.

Retail rents in Orchard are likely to decline 3% to 4% year-on-year (YoY) in 2024 amidst slower rental growth in H1 2024.

“While the supply pipeline may be tight in the near term and tourism recovery [is] expected to continue, we foresee rental growth to continue to decelerate for the rest of the year. Labour supply issues and rising operating costs are returning to dog the industry,” Savills said.

In Q2, the average monthly rent in the Orchard Area rose by 0.6% quarter-on-quarter (QoQ) to $23.00 per sq ft. However, the Orchard Area reported no net absorption for the period.

Meanwhile, the islandwide retail vacancy rate slipped slightly to 6.6% in Q2, down from 6.7% in Q1, as the demand for supply increased to 495,000 sq ft, up from 463,000 sq ft in Q2.

Savills also projects the average rents in the Suburban Area to stay flat this year despite the healthy take-up in the new Pasir Ris Mall.

In addition, Savills projects that annual new completions over the next three years will remain below 2024 levels, averaging 578,000 sq ft (NLA) per year from 2025 to 2027.