Orchard Road retail rents to grow 6% in 2023: Savills Singapore
Sulian Tan-Wijaya, executive supervisor, Savills retail and lifestyle, adds that main sites remain to see healthy need from international stores seeking to establish their first Singapore outlet.
The much higher rents were promoted by stronger tourist figures, in which in turn prompted ongoing growth in retail and F&B sales. Visitor appearances in Singapore increased to close to 3.9 million in 3Q2023, compared to a quarterly average of 4.5 million between 2015 and 2019.
On the other hand, country retail rents are foreseed to stay fixed in 2024, as outgoing travel and rising cost of living dampen discretionary consumption costs in the real estate heartlands.
Heading right into the new year Savills predicts tepid economic growth, coupled with heightened inflation and rate of interest, to lead to weaker growth in retail leas in 2024. Nonetheless, recurring recovery in tourism is expected to support rents in prime locations. “Retail leas on Orchard Road remain to gain highly from the solid tourist appearances expected in 2024,” remarks Alan Cheong, executive director, research study and consultancy at Savills Singapore.
In terms of essential patterns, Savills emphasize modifications throughout the fitness and health market to adapt to adjusting customer demands, with new brands going into the market and more openings occurring on a smaller scale.
Savill Singapore ventures retail rentals to go on its development momentum upheld by a recurring improvement in visitor appearances. In a November research study report, the consultancy estimates average rental fees on Orchard Road will see a full-year rise of 6% y-o-y for 2023. Meanwhile, suburban shopping mall rentals are expected to grow by 1% to 2% this year.
The finalization of renewed retail ventures like Marina Square, Forum Shopping Mall and Harbourfront Centre is also anticipated to lift overall leasing expectations in the Central Region. Savills is projecting Orchard retail rental fees to grow in between 3% and 5% next year.
Islandwide vacancy for retail spot reduced 0.3 percentage points q-o-q to 7.2% in 3Q2023. “Even though net demand for islandwide retail sector turned adverse in 3Q, the elimination of 248,000 sq ft of retail space throughout the island softened the adverse impact from the need side,” Savills’ report states.
On top of that, Savills notes there was some consolidation amongst the greater work out chains in central places over hybrid working arrangements. “So as to handle their costs and improve their earnings flows, businesses will certainly begin to right-size their operations or diversify their companies,” the record states.
The full-year foresight begins the back of a good performance for the retail real property market in 3Q2023. Rents of Orchard area shopping centers monitor by Savills increased 1.3% q-o-q to $22.40 psf very last quarter, whilst country malls viewed a rise of 0.7% q-o-q to $14.60 psf across the identical period.