Singapore’s overall retail sales, excluding motor vehicles, saw fluctuations in the second quarter of 2024. Sales declined from $3.5 billion in March to $3.3 billion in April, largely due to a decrease in tourist arrivals. However, May witnessed a rebound, with retail sales reaching $3.6 billion, driven primarily by increased spending on food and liquor. According to Ethan Hsu, Knight Frank’s head of retail, the retail market seems to have stabilized at sustainable levels in 2Q2024, following a surge in activity during the concert-heavy first quarter.
Prime retail locations in the city-fringe areas experienced the most significant growth in leasing activity in 2Q2024, with rents increasing by 1.3% quarter-on-quarter to $23.70 per square foot per month (psf pm). Prime rents in suburban areas also saw an uptick, rising 1.2% quarter-on-quarter to $26.50 psf pm. This was followed by the Marina Centre, City Hall, and Bugis areas, where rents rose 1% quarter-on-quarter to $25.50 psf pm, and the Orchard area, which saw a 0.6% increase to $30.70 psf pm.
Despite the fluctuating environment, Hsu anticipates that prime retail rental growth will likely slow for the remainder of the year. Inflationary pressures could hinder expansion by retailers, possibly leading to consolidation instead. However, he maintains that rents are still on track to grow between 2% and 4% for the entire year, consistent with his earlier forecasts.
While Singapore’s retail sector continues to attract interest from retailers, Hsu notes that inflation and a strong Singapore dollar have moderated growth as retailers grapple with rising operating costs.
In the first half of 2024, prime retail rents islandwide grew by 1.5%, supported by post-pandemic recovery and new openings by both local and international brands. Notable entries include British footwear brand Hunter, which launched its first outlet in Singapore at Plaza Singapura, and French sports apparel company Hoka, which opened a store in Ion Orchard. The food and beverage sector also saw new players, including Ipoh Town, a Malaysian-style coffeehouse at Jewel Changi Airport, and Kebuke, a Taiwanese bubble tea chain at Taste Orchard.
Overall, prime retail rents islandwide increased by 0.9% quarter-on-quarter and 3.8% year-on-year to reach $27.40 psf pm in 2Q2024, according to a July report from Knight Frank. This growth occurred despite a dip in tourist arrivals following a surge driven by high-profile concerts in the first quarter.
Data from the Accounting and Corporate Regulatory Authority showed that retail and F&B business closures reached 2,631 in 2Q2024, outnumbering the 2,502 new businesses formed during the same period. This marks a reversal from the previous quarter, which saw a net gain of 295 new retail and F&B enterprises.
While high-profile concerts by Taylor Swift and Coldplay led to a surge in tourist arrivals, peaking at nearly 1.5 million in March, visitor numbers stabilized in the last quarter, with 1.4 million tourists in April and 1.3 million in both May and June.
Knight Frank defines prime retail locations as high-yielding units ranging from 350 to 1,500 square feet, offering the best frontage, connectivity, footfall, and access within a shopping mall. These units are typically located on the ground or basement floors of malls connected to an MRT station or bus interchange.