Orchard Road retail rents to grow 6% in 2023: Savills Singapore

The full-year projection begins the back of a positive performance for the retail real property industry in 3Q2023. Rents of Orchard area shopping malls tracked by Savills increased 1.3% q-o-q to $22.40 psf previous quarter, while rural malls found an increase of 0.7% q-o-q to $14.60 psf all over the similar period.

In terms of key trends, Savills feature adjustments throughout the fitness and health industry to adapt to adjusting customer demands, with brand-new brand names entering the marketplace and even more openings taking place on a smaller sized range.

On top of that, Savills notices there was some consolidation amongst the bigger health and fitness chains in central spots over hybrid working setups. “In order to manage their costs and improve their income flows, services will commence to right-size their proceedings or diversify their companies,” the report states.

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Savill Singapore projects retail rents to continue its development momentum supported by a recurring revival in visitor appearances. In a November research report, the consultancy predicts average rents on Orchard Roadway will likely see a full-year increase of 6% y-o-y for 2023. Meanwhile, suburban mall rentals are expected to grow by 1% to 2% this year.

Sulian Tan-Wijaya, executive director, Savills retail and lifestyle, adds that main locations remain to observe healthy and balanced need from international merchants seeking to open their very first Singapore outlet.

The completion of rejuvenated retail projects like Marina Square, Forum Shopping Center and Harbourfront Centre is additionally assumed to raise whole rental expectations in the Central Region. Savills is predicting Orchard retail rental fees to expand between 3% and 5% next year.

The higher rental fees were supported by stronger tourist numbers, in which subsequently prompted ongoing growth in retail and F&B sales. Tourist arrivals in Singapore increased to close to 3.9 million in 3Q2023, contrasted to a quarterly average of 4.5 million in between 2015 and 2019.

Heading into the new year Savills predicts tepid economic growth, combined with enhanced inflation and rates of interest, to cause weaker development in retail rents in 2024. Nonetheless, ongoing recovery in tourism is anticipated to support rents in prime locations. “Retail rents on Orchard Roadway remain to benefit highly from the strong traveler arrivals anticipated in 2024,” remarks Alan Cheong, executive supervisor, research study and consultancy at Savills Singapore.

On the other hand, country retail rents are expected to stay fixed in 2024, as outbound travel and rising cost of living dampen optional consumption costs in the real estate heartlands.

Islandwide vacancy for retail spot reduced 0.3 percentage factors q-o-q to 7.2% in 3Q2023. “Although net appeal for islandwide retail sector turned negative in 3Q, the elimination of 248,000 sq ft of retail area across the island lightened the unfavorable impact from the need side,” Savills’ report states.


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