Prime retail rent to grow between 3-5% in 2023: report

This recovery will be led by the shopping belt on Orchard Road. 

Prime retail rent in Singapore is projected to grow between 3-5% in 2023 as retail sales performance sustains recovery, Knight Frank reported. 

This is provided that no size limits to gatherings and quarantine requirements for cross-border arrivals will be put in place. This growth will be led largely by the shopping belt on Orchard Road. 

“The retail sector endured and has come through an extremely difficult time of unprecedented challenge, only starting to gain traction from the removal of measures from Q2 onwards,” the report noted. 

“And even with the worsening of economic conditions, as well as the impact to domestic consumption due to the increase in Goods and Services Tax (GST) and rising labour costs, the retail sector is nonetheless in a much better position now than it was under severely restrictive trading conditions while in the throes of the pandemic.”

Singapore’s retail market recovery started in the second half of 2022 as shopping activity resumed, particularly along Orchard Road. Tourists footfall also returned to its pre-pandemic levels as 2.2 million and 2.6 million international tourist arrivals were recorded in the last two quarters of the year. 

Prime retail rents island-wide averaged S$26.10 psf pm, pointing to a 1.7% q-o-q increase in Q4 2022, and an overall 2.6% growth for the year,” Knight Frank reported. 

Read more: Islandwide prime retail rents to further recover in 2023

Moreover, suburban malls weathered the pandemic better than those in the Central Area. However with the world generally opening up and workers brought back to the office throughout 2022, it was the Orchard area that recorded the highest increase of 3.1% y-o-y to S$29.10 psf pm, followed by the Marina Centre, City Hall and Bugis regions with rents up 2.6% y-o-y at S$23.90 psf pm in the fourth quarter, as a result of the steady flow of international visitors.