RETAIL rents dipped 0.1 per cent in the fourth quarter of 2023, but were up 0.4 per cent for the full year, the Urban Redevelopment Authority (URA) said on Friday (Jan 26). 

This is the first time that rents have risen on an annual basis since the Covid-19 pandemic, as the retail sector makes a slow and steady recovery, said market watchers. 

Angelia Phua, JLL’s consulting director for research and consultancy, said: “The retail property market recovery remained largely on track. Resilient occupier demand and moderated supply continued to drive retail vacancy rates lower.”

Islandwide vacancy rate of retail space fell to 6.5 per cent as at end-December, from 7.2 per cent as at end- September. 

Tricia Song, CBRE’s head of research for Singapore and South-east Asia, noted: “All sub-markets saw positive net absorption in Q4 2023, with the fringe and Orchard areas outperforming the rest of the sub-markets.”

Wong Xian Yang, Cushman and Wakefield’s head of research for Singapore and South-east Asia, said that Orchard retail vacancy rates tightened to 9 per cent in Q4 but are still markedly higher than pre-pandemic rates.

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He added: “Amid recovering tourism, the main shopping belt along Orchard Road remains the destination-of-choice for both local and international retailers as they gear up for expansion and showcase their brands to the region.”

The amount of occupied retail space rose by 63,000 square metres (sq m) net lettable area (NLA) in Q4, compared with a decrease of 8,000 sq m NLA in the prior quarter.

The stock of retail space increased by 21,000 sq m NLA in Q4; in Q3, it had fallen by 23,000 sq m. 

Prices for retail space rose 1.2 per cent in Q4, following a 0.6 per cent increase in the previous quarter. 

Year on year, prices climbed 1.2 per cent, reversing the 7.8 per cent fall in 2022.  

As at end-Q4, there was a total supply of 621,000 sq m gross floor area of retail space from projects in the pipeline, up from 600,000 sq m in Q3. 

Looking ahead, market watchers expect retail rents to rise between 1.5 and 4 per cent in 2024. 

Leonard Tay, Knight Frank Singapore’s head of research, said: “The retail sector outlook for 2024 is set to be stable with potential for cautious growth, fuelled by the continued improvement of visitor arrivals to Singapore for both business and leisure purposes.” 

More visitors from China are expected, as Singapore and China begin their mutual 30-day visa-free arrangement in February, he added. “However, the positive impact of continued normalisation will be held in check by increased operating costs, and thus, prime retail rents are envisaged to increase at moderate levels.”