Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
In its 4Q2022 market statement, Knight Frank mentions that prime retail areas in the Orchard Roadway location blazed a trail in relations to rental growth, charting a boost of 3.1% y-o-y in 4Q2022 to $29.10 psf per month, complied with by prime retail space in the Marina Centre, City Hall and Bugis sub-market which registered a development of 2.6% y-o-y to $23.90 psf monthly. The rise in rentals was sustained by a rise in global tourist arrivings, along with the return of laborers returned to the office.
The rehabilitation of the Singapore retail store market obtained momentum in the latter part of last year, thanks to social distancing measures being relaxed and also borders restarting. “The retail industry withstood and has indeed come through a very difficult moment of unexpected difficulty, just starting to get grip from the clearing of measures from 2Q2022 onwards,” remarks Ethan Hsu, Knight Frank Singapore’s head of retail.
According to records put together by Knight Frank Research study, prime market rentals island-wide climbed 1.7% q-o-q in 4Q2022 to hit around $26.10 psf each month. This delivers full-year prime retail rental expansion to 2.6% for 2022.
A different statement by Edmund Tie Research also highlights records better pointing to the conditioning of interest for retail industry areas in the Orchard location. Based upon retail properties tracked by the consultancy, prime first-storey retail location on Orchard and also Scotts Road viewed the greatest rental development of 7.4% for the entire of 2022 to $39.20 psf monthly. In the fringe including suburbs, rentals expanded by 6.7% in 2022 to $33.10 psf monthly, while in other city areas, it increased by 3.7% to $19.20 psf each month, based upon Edmund Tie’s data.
Canninghill Piers Capitaland & City Development Ltd (CDL)
The consultancy is predicting prime first-storey retail rentals in Orchard along with Scotts Road to sustain its growth of in between 7% and 9% in 2023, whilst leas in different retail sub-markets are anticipated to grow between 3% as well as 6%.
Knight Frank’s Hsu is also projecting prime retail leas to carry on increasing this year, indicating that the retail industry market is “in a much better setting right now”, even taking into account the boost in the Goods and Services Tax (GST) and also a better soft economical outlook. “As long as there are no measurements controls to gatherings along with quarantine responsibilities for cross boundary arrivings, prime leas of retail space are most likely to grow in between 3% and 5% for all of the of 2023, with the prime purchasing belt Orchard Road leading the rehabilitation,” he predicts.
Lam Chern Woon, head of research and consulting at Edmund Tie, expects a brighter year ahead for the retail real estate market, supported by the proceeded recovery in the tourist industry. “With the bulk of the supply pipeline slated ahead onstream in 2023, including The Woodleigh Shopping mall, and even retail outlets at One Holland Village, Guoco Midtown as well as IOI Central, the supply-demand dynamics are expected to be balanced this year,” he includes.
Edmund Tie’s record even points out that in 3Q2022, islandwide final absorption for retail places appeared at 323,000 sq ft, a four-fold rise from the 86,000 sq ft signed up the preceding quarter, signalling enhancing need.
