Prime retail rents set to rise as global brands expand in Singapore: Knight Frank
SINGAPORE’S prime retail rents are expected to rise between 3 per cent and 5 per cent for the whole of 2023, despite signs of the growth moderating in the second quarter, said Knight Frank in a report on Tuesday (Jul 18).
The prime retail sector has grown steadily as global private-wealth flows into the Republic and international brands expand, added the real estate consultancy.
“The influx of private wealth from around the world into Singapore has raised its profile as a safe destination, built on foundations of stable political, pro-enterprise and social frameworks, which in turn drives economic growth and prosperity,” said Knight Frank Singapore’s head of retail Ethan Hsu.
The prime retail sector has benefited from the spillover effects of the rise in private wealth, as new stores by international luxury brands including Giuseppe Zanotti, Grand Seiko and Atelier Cologne continued their expansion into the Republic in the second quarter.
Over the same period, new food and beverage (F&B) entrants such as Unatoto, Takagi Coffee, Hanazen, Luckin Coffee, M5 Coffee and Tim Hortons also arrived.
Brands which shuttered their doors have also returned. These include English chain Ben’s Cookies, which closed its doors here in 2021, as well as Hong Kong cosmetics chain Sasa, which announced plans to return to Singapore after closing all its 22 outlets here three years ago.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Knight Frank also noted the rise of special concept stores in Singapore, which marked the country’s position as a gateway city for retailers and F&B chains to gain a foothold in South-east Asia.
These include Coach’s first cafe and Gashapon Bandai, a speciality store from Japan that offers a wide range of specially designed vending machines dispensing capsule toys, expanding variety in the retail sector.
Average prime retail rents on the rise
Knight Frank noted that the average gross islandwide prime retail rents increased 5.4 per cent year on year in the April-to-June period. Quarter on quarter, rents rose 0.8 per cent, a smaller increase compared with the 1.2 per cent gain in the previous quarter.
This is because the growing number of tourists has increased the need for more manpower in the retail sector, which is already under pressure from the tight labour in the service industry.
“The ongoing labour crunch, rising business costs and high interest rates impacting business loans have created an uncertainty where more retailers and F&B operators are treading cautiously, with some holding back on expansion plans,” Knight Frank analysts noted.
However, a slight slowdown in the rise of prime retail rents does not change the upward trend because of positive momentum from the influx of private wealth and arrivals of international brands.
The prime retail rents in the Marina Centre, City Hall and Bugis micro-market registered a 1.4 per cent increase on the quarter, and a significant 6 per cent year-on-year increase, both of which exceeded the increments of the islandwide average.
At the same time, Orchard’s prime retail rents increased 5.9 per cent on the year, greater than the 5.4 per cent increase of the islandwide average.
Copyright SPH Media. All rights reserved.
