The weak consumer spending in 2024 is expected to dampen rental forecasts for Singapore’s retail property market by the end of the year, according to Alan Cheong, executive director of research and consultancy at Savills Singapore. He notes that the monthly retail sales index and food and beverage sales index have mostly been negative this year. As a result, Cheong predicts only a small 2% increase in rents for prime Orchard Road properties, compared to the initial expectation of 3% to 5%. Suburban retail rents are expected to remain flat, in line with earlier forecasts.
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Recent joint research by DBS and Singapore Management University (SMU) shows that consumer concerns over rising inflation have eased. Inflation expectations among Singaporeans remained at 3.8% between June and September, with many attributing this to the global economic slowdown, high interest rates, and potential easing of supply chain disruptions.
Despite a packed calendar of headline concerts, conferences, and exhibitions in Singapore this year, retail spending and rental rates saw limited support. According to CBRE’s research, these events had a nuanced effect on surrounding malls. While international concerts like Taylor Swift and Coldplay attracted more tourists and contributed to tourism receipts, other events such as business conferences did not significantly impact retail activity. Even major events like the Formula One Grand Prix did not result in higher tourist foot traffic in areas like Orchard Road.
However, Sulian Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore, notes that Singapore’s reputation as a regional hub still attracts new-to-market brands. This year, notable new retail stores include KSisters, The Pace, Brands for Less, and Hoka, as well as wellness concepts like Rekoop and Hideaway. New-to-market F&B options like Sushi Samba and boutique coffee chains also opened in Singapore. Additionally, new dining concepts such as Centre of the Universe and Rasa are expected to enhance the city’s dining scene.
As a result, prime shopping malls in Orchard Road have enjoyed high occupancy rates this year, as businesses remain confident in the retail market. Tan-Wijaya predicts that new-to-market brands will continue to support retail demand and rental growth in central Singapore. Savills’ Cheong also expects landlords to have more flexibility in implementing positive rental adjustments next year, as new retail space supply becomes more limited. He also anticipates that more retailers will optimize their real estate strategies in the coming year, such as right-sizing their spaces or shifting operations to central kitchens. Overall, the market is still growing and remains an attractive destination for new-to-market brands.