Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
The recovery of the Singapore retail industry market got force in the last part of last year, thanks to social distancing strategies being relaxed and borders resuming. “The retail market endured and has come through an extremely tough period of unparalleled challenge, only starting to gain traction from the clearing of measures from 2Q2022 along,” remarks Ethan Hsu, Knight Frank Singapore’s head of retail industry.
In its 4Q2022 retail report, Knight Frank notes that prime retail areas in the Orchard Roadway place led the way in relations to lease growth, charting an increase of 3.1% y-o-y in 4Q2022 to $29.10 psf per month, adhered to by prime retail area in the Marina Centre, City Hall together with Bugis sub-market which signed up a growth of 2.6% y-o-y to $23.90 psf per month. The rise in rents was maintained by an increase in foreign traveler arrivals, in addition to the return of workers went back to the office.
The consultancy is forecasting prime first-storey retail rentals in Orchard and Scotts Road to maintain its growth of between 7% also 9% in 2023, while leas in other retail sub-markets are expected to expand in between 3% as well as 6%.
A different write up by Edmund Tie Research also highlights data further indicating the fortifying of need for retail spaces in the Orchard location. Based on retail assets tracked by the consultancy, prime first-storey retail location on Orchard and also Scotts Roadway saw the best rental growth of 7.4% for the entire of 2022 to $39.20 psf each month. In the fringe together with suburbs, leas grew by 6.7% in 2022 to $33.10 psf per month, while in some other city places, it grew by 3.7% to $19.20 psf monthly, based upon Edmund Tie’s information.
Edmund Tie’s record even points out that in 3Q2022, islandwide final absorption for retail spots appeared at 323,000 sq ft, a four-fold increase from the 86,000 sq ft signed up the prior quarter, signalling reinforcing need.
According to records put together by Knight Frank Research study, prime retail rentals island-wide climbed up 1.7% q-o-q in 4Q2022 to reach around $26.10 psf each month. This delivers full-year prime retail leasing development to 2.6% for 2022.
Lam Chern Woon, head of research and consulting at Edmund Tie, projects a better year forward for the retail property market, supported by the proceeded recovery in the tourism field. “With the quantity of the supply pipeline slated to come onstream in 2023, consisting of The Woodleigh Shopping mall, and even retail shops at One Holland Village, Guoco Midtown and IOI Central, the supply-demand aspects are anticipated to be adjusted this year,” he adds.
Knight Frank’s Hsu is also predicting prime retail leas to continue growing this year, indicating that the retail industry sector is “in a far better position right now”, even thinking about the increase in the Goods and Services Tax (GST) furthermore a much more low-key economical outlook. “So long as there are no size limits to gatherings and quarantine guidelines for cross boundary arrivals, prime rents of retail area are likely to grow between 3% and 5% for the entire of 2023, with the prime shopping belt Orchard Road leading the improvement,” he forecasts.