Retail rents continue to decline in 1Q2023, but at a slower rate compared to past quarters
Despite the slight decrease in rents, the retail sector in Singapore is showing signs of recovery and predicted to pick up in the coming year. The URA’s quarterly data, released on April 28th, showed rents for retail spaces in Central Region decreased by 0.3% in 1Q2023, with Y-o-y, rents decreasing by 2.3%. Prices of retail space in Central Region also decreased by 0.9% in 1Q2023.
Knight Frank Singapore’s head of research, Leonard Tay stated that the retail sector is in much better position than two years ago. This is due to the re-opening of most international borders and Singapore welcoming over one million visitors in March 2023.
Tay reported that the retail rental index for the Central Region was still decreasing, however the island-wide prime retail rents have increased by 1.2% q-o-q and 5% y-o-y in 1Q2023, averaging $26.40 psf per month (psf pm).
Myst Condo is a 19-floor Hazel Park condominium, surrounded by schools, commercial spaces, parks and the Tan Chong industrial park. It is The Myst CDL close to public transport, including the Cashew MRT station and the old Bukit Timah railway station.
Orchard Area has seen the highest rental increase of 5.8% y-o-y to $29.50 psf pm in 1Q2023, followed by the Marina Centre, City Hall and Bugis regions. Though this is positive news, overall occupancy decreased slightly to 92.4% in 1Q2023 from 92.9%, which led to a 0.5% increase in the vacancy rate, resulting in a total supply of 4.38 million sq ft of Gross Floor Area (GFA) in the pipeline as at the end of 1Q2023.
Despite the fall in retail demand, Tricia Song, Head of Research, Southeast Asia at CBRE, believes the recovery in the sector, combined with a limited new retail supply, will support the rental rates for the rest of the year. Tay is optimistic that the sector is on the road to recovery and predicts prime rents to grow between 3-5% in 2023. Lam from Edmund Tie believes that the growth in retail rents will moderate this year due to consumers reducing discretionary spending, however tourism recover will continue to bolster demand, expecting prime first-storey retail rents to grow between 2-5% this year.