Well-capitalised chains holding up Singapore retail occupancy, rents, as challenges open duality in market
Retail success said to hinge on differentiation as brands vie to stand out amid rising costs and competition
[SINGAPORE] Rents and occupancy in Singapore’s retail sector remain stable, supported by well-capitalised international chains, even as smaller operators struggle with rising costs – pointing to a dual-speed market.
Global brands can absorb higher operating costs and execute aggressive marketing and expansion strategies, putting pressure on smaller domestic players to either differentiate themselves or risk exiting, said consultancy Knight Frank Singapore in a report released on Monday (Oct 13).
Prime retail rents in Orchard Road averaged S$31.70 per square foot (psf) per month in the third quarter of 2025, up 3 per cent from a year earlier. Islandwide, prime retail rents rose 3.4 per cent year on year to S$28.40 psf per month, according to Knight Frank data.
International retail brands continue to occupy high-footfall locations frequented by locals and tourists, said Cushman & Wakefield in its Q3 retail report released earlier this month.
Notable entrants in the quarter include Australian frozen yogurt brand Yo-Chi in Orchard Central, Chinese beauty brand Joocyee at Wisma Atria and American athletic apparel Alo Yoga at The Shoppes at Marina Bay Sands.
Prime retail rents for both the Orchard and suburban areas rose 0.3 per cent on the quarter to S$36.21 psf per month and S$33.11 psf per month, respectively, showed Cushman & Wakefield data.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Overall vacancy rates remained low, standing at 6.9 per cent in Orchard and 6.6 per cent in suburban malls, said Cushman & Wakefield.
Despite closures among some food and beverage (F&B) and cinema operators, Cushman & Wakefield observed that other activity-based retailers continue to expand, drawn by Singapore’s affluent and diverse consumer base.
Openings such as Munchi Pancakes and Chagee show “sustained tenant confidence in well-located malls”, the firm noted.
SEE ALSO
The allure of Johor
Cross-border shopping adds another layer of challenge for local retailers, as the stronger Singapore dollar encourages residents to spend across the Causeway, said Knight Frank.
Between January and August, almost 12.9 million visitors from Singapore went to Johor, making up 78.1 per cent of all visitors to the state. This marked a 17 per cent increase from the 11 million Singaporean visitors during the same period a year earlier.
Still, outbound spending in Johor is not as damaging to the domestic retail market as it may seem, added Knight Frank.
Citing data from UOB, it noted that 80 per cent of the trips by those with the lender’s Singapore-issued cards were day trips, with each cardholder spending more than S$100 on average.
This suggests that Singaporeans spent over S$1 billion across the Causeway in the first eight months of 2025, excluding those who stayed longer than a day.
“While this is substantial, the amount is a marginal 3.6 per cent of the S$28.3 billion total retail sales recorded in Singapore in the same period,” said Knight Frank.
The shopping experiences in Singapore and Johor differ, and both markets are expected to maintain and develop their own distinct retail positioning, strengths and niches, it noted.
“This raises the impetus for Singapore retailers and landlords to focus on distinctive and differentiating factors to attract and retain shoppers,” it stated. “Consumers will always seek variety, wanting different products and services and will be willing to pay for what they deem to be of value to them.”
Knight Frank Singapore’s head of retail Ethan Hsu said: “To survive and stand out in Singapore’s exacting retail sector, success hinges on differentiation and carving out a unique niche from the mass of lookalike offerings.”
Looking ahead, Knight Frank expects overall retail rental growth in 2025 to moderate to around 1 to 3 per cent, as landlords balance profitability with tenant sustainability.
Savills Singapore’s executive director of retail and lifestyle Sulian Tan-Wijaya reckons that tourism-driven retail still has bright spots.
She noted that the 2025 Formula 1 Singapore Grand Prix attracted a sell-out crowd of 300,641 race enthusiasts, 11.7 per cent higher than last year.
“Whilst the exact breakdown between local and visitor attendees is not known yet, the high hotel occupancy rates and surge in room rates would point to buoyant retail and F&B spending during the three-day race weekend,” said Tan-Wijaya.
Concerts as well as events in the meetings, incentives, conferences and exhibitions space, such as Token2049 and the Milken Institute Asia Summit, have attracted visitors and high-profile business travellers, further spurring retail spending, she added.
Tough on the mid-market segment
Consumers also have easy access to online shopping platforms, where cheaper alternatives are widely available across a broad range of goods, particularly for undifferentiated mass products, said Knight Frank.
As a result, the mid-market segment has become the most challenging space to operate in, amid rising costs and stiffer competition, it added.
Despite the growth of e-commerce, bricks-and-mortar stores remain relevant, as consumers continue to seek social interaction and sensory experiences.
Everyday goods such as groceries, electronics and household items are increasingly purchased online, whereas luxury, lifestyle, dining and entertainment segments continue to rely on physical stores.
However, Tan-Wijaya noted that performance across the luxury retail segment was mixed, with jewellery sales remaining strong, while the watches, beauty and eyewear categories showed more modest growth.
With limited amount of real estate for luxury brands, there will be limited potential for such brands to grow their retail footprint here compared with other countries, she added.
Still, Singapore – being a global financial hub and home to a growing number of ultra-high and high-net-worth individuals – is an attractive place for luxury brands to anchor their presence, she noted.
“The continued growth in ultra-high-net-worth individuals in Singapore will support the luxury market, but brands must also adapt to their demand for greater personalisation and evolve their brand narrative to create stronger emotional connections with this discerning customer segment.”
Copyright SPH Media. All rights reserved.
