Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
Knight Frank’s Hsu is also projecting prime retail leas to proceed increasing this year, noting that the retail industry sector is “in a far better placement now”, also taking into consideration the rise in the Goods and Services Tax (GST) and a better muted financial expectation. “As long as there are no measurements restricts to events along with quarantine requirements for cross border returns, prime rents of retail room are likely to expand in between 3% and also 5% for the entire of 2023, with the prime shopping belt Orchard Road leading the improvement,” he anticipates.
According to data put together by Knight Frank Research, prime market leas island-wide climbed 1.7% q-o-q in 4Q2022 to reach approximately $26.10 psf monthly. This delivers full-year prime retail rental growth to 2.6% for 2022.
The improvement of the Singapore retail industry market got momentum in the latter half of last year, thanks to social distancing measures being calmed and boundaries restarting. “The retail market endured and has come through an incredibly difficult time of unexpected challenge, only commencing to acquire traction from the clearing of steps from 2Q2022 along,” remarks Ethan Hsu, Knight Frank Singapore’s head of retail.
The consultancy is forecasting prime first-storey retail rents in Orchard and Scotts Roadway to sustain its progression of in between 7% and 9% in 2023, whilst rentals in other retail sub-markets are prepared for to develop between 3% and 6%.
Edmund Tie’s record also mentions that in 3Q2022, islandwide net absorption for retail places appeared at 323,000 sq ft, a four-fold rise from the 86,000 sq ft enrolled the prior quarter, signalling enhancing necessity.
In its 4Q2022 retail statement, Knight Frank mentions that prime retail rooms in the Orchard Road area blazed a trail in relations to rental progress, laying out a rise of 3.1% y-o-y in 4Q2022 to $29.10 psf each month, followed by prime retail room in the Marina Centre, City Hall and even Bugis sub-market which signed up an expansion of 2.6% y-o-y to $23.90 psf per month. The rise in leas was supported by an increase in global visitors arrivals, along with the return of workers returned to the office.
Lam Chern Woon, head of research and consulting at Edmund Tie, projects a brighter year forward for the retail estate market, supported by the proceeded recovery in the tourism sector. “With the majority of the supply pipe slated ahead onstream in 2023, consisting of The Woodleigh Shopping center, and retail outlets at One Holland Village, Guoco Midtown as well as IOI Central, the supply-demand dynamics are anticipated to be adjusted this year,” he includes.
A different report by Edmund Tie Research also highlights records further pointing to the strengthening of need for retail spaces in the Orchard location. Based on retail assets tracked by the consultancy, prime first-storey retail area on Orchard and Scotts Road viewed the strongest rental buildup of 7.4% for the whole of 2022 to $39.20 psf per month. In the edge including suburbs, rentals grew by 6.7% in 2022 to $33.10 psf per month, while in various city places, it expanded by 3.7% to $19.20 psf monthly, based upon Edmund Tie’s data.