Prime retail rents to increase between 3% to 5% in 2023

In 3Q23, the average gross rent of prime spaces island-wide rose 4.3% YoY to $26.70 psf pm.

With Singapore becoming a destination of choice for many international artists, increasing visitor arrivals, and retail operators adopting online tools to connect with a larger customer base, Knight Frank believes that the local retail sector is "on course to strengthen in 2023 and into early 2024."

Taking into account all these factors, Knight Frank said the prime retail round should also stay the source and increase between 3%-5% for the whole of 2023.

In 3Q23, the average gross rent of prime spaces island-wide increased 1.1% QoQ and 4.3% YoY to S$26.70 psf pm.

Prime retail rents in all micro markets likewise grew, rising by more than 5% YoY, except for the suburban areas that registered a more moderate growth of 0.6% YoY, after having recovered much earlier than the retail spaces in the more central areas of the island. 

Nevertheless, suburban prime retail rents expanded the most in 3Q23, with a 2.1% increase to $25.90 psf pm.

"Going forward, retailers will continue to evolve and adopt new tools to obtain trend-based competitive advantages over competitors for the attention and spending dollar of consumers," Knight Frank said.

"With the increasing visitor arrivals, the remaining three months of 2023 will likely see the retail market consolidating the improvements achieved since Singapore opened its borders, culminating in year-end activities to wrap up a largely positive and eventful year," Knight Frank added.