Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
In its 4Q2022 retail record, Knight Frank mentions that prime retail rooms in the Orchard Road location led the way in relations to rental growth, charting a boost of 3.1% y-o-y in 4Q2022 to $29.10 psf per month, adhered to by prime retail space in the Marina Centre, City Hall and Bugis sub-market which signed up a development of 2.6% y-o-y to $23.90 psf monthly. The surge in rents was supported by a boost in international traveler landings, as well as the return of employees went back to the workplace.
The rehabilitation of the Singapore retail store market got momentum in the last part of past year, thanks to social distancing actions being relaxed and also borders restarting. “The retail market endured and has indeed come through an exceptionally hard moment of unprecedented obstacle, just starting to acquire traction from the removal of steps from 2Q2022 ahead,” comments Ethan Hsu, Knight Frank Singapore’s head of retail industry.
According to data compiled by Knight Frank Research, prime retail rentals island-wide climbed 1.7% q-o-q in 4Q2022 to reach around $26.10 psf per month. This delivers full-year prime retail rental expansion to 2.6% for 2022.
Midtown Modern Tan Quee Lan Street
Lam Chern Woon, head of research and consulting at Edmund Tie, anticipates a better year ahead for the retail real estate market, sustained by the continued healing in the tourist field. “With the majority of the supply pipe slated to find onstream in 2023, consisting of The Woodleigh Mall, and retail outlets at One Holland Village, Guoco Midtown and IOI Central, the supply-demand aspects are anticipated to be stabilized this year,” he adds.
Edmund Tie’s record in addition points out that in 3Q2022, islandwide net absorption for retail places appeared at 323,000 sq ft, a four-fold increase from the 86,000 sq ft signed up the past quarter, signalling enhancing demand.
Knight Frank’s Hsu is also forecasting prime retail rents to proceed growing this year, indicating that the retail industry sector is “in a far better setting currently”, also considering the rise in the Goods and Services Tax (GST) and a much more low-key economic expectation. “As long as there are no dimension limits to gatherings and quarantine requirements for cross boundary returns, prime leas of retail room are most likely to grow between 3% and 5% for the entire of 2023, with the prime purchasing belt Orchard Road leading the improvement,” he predicts.
A different write up by Edmund Tie Research also feature records better pointing to the conditioning of interest for retail industry areas in the Orchard location. Based upon retail possessions tracked by the consultancy, prime first-storey retail space on Orchard and also Scotts Roadway observed the greatest rental growth of 7.4% for the entire of 2022 to $39.20 psf per month. In the fringe and suburban areas, leas expanded by 6.7% in 2022 to $33.10 psf each month, while in some other city places, it grew by 3.7% to $19.20 psf monthly, based on Edmund Tie’s files.
The consultancy is predicting prime first-storey retail rentals in Orchard along with Scotts Roadway to preserve its progression of between 7% and 9% in 2023, while rentals in other retail sub-markets are expected to grow between 3% and also 6%.
