Singapore Retail Landscape: Visitor Trends and Rent Changes Through Mid-2024
Key Highlights:
– Singapore saw 8.2 million visitor arrivals in the first half of 2024, with March peaking at nearly 1.5 million.
– Prime retail rents rose by 0.9% quarterly and 3.8% yearly to S$27.40 psf pm in Q2 2024.
– Retail sales fluctuated but rebounded to S$3.6 billion in May.
– New international brands are entering the Singapore retail scene, but challenges persist.
Visitor Arrivals: Post-Concert Stabilization
In a study by Knight Frank , Singapore , As of June 2024, the Singapore Tourism Board (STB) reported a robust total of 8.2 million visitor arrivals for the year. The surge in visitor numbers was particularly notable in March, which saw a peak of almost 1.5 million arrivals. This increase was largely attributed to high-profile events such as the Taylor Swift and Coldplay concerts held earlier in the year. These concerts attracted numerous overseas attendees, contributing to the initial spike in tourism.
However, the effect of these concerts on visitor arrivals proved to be short-lived. The influx of visitors tapered off, with arrivals dropping to 1.4 million in April and stabilizing at around 1.3 million in both May and June. This decline reflects a return to more typical levels following the concert-driven peak of the first quarter.
Retail Rent Trends: Gradual Increase
In the second quarter of 2024, the average gross rent for prime retail spaces across Singapore increased by 0.9% quarter-on-quarter (q-o-q) and 3.8% year-on-year (y-o-y), reaching S$27.40 per square foot per month (psf pm). This uptick indicates a continuing recovery in the retail sector post-pandemic, albeit tempered by the prevailing economic challenges.
The City Fringe micromarket experienced the highest quarterly growth, with rents rising by 1.3% to S$23.70 psf pm. Meanwhile, the Suburban micromarket saw a notable annual increase of 4.6%, bringing rents to S$26.50 psf pm. Despite the overall positive trend, the growth in rents is being moderated by elevated operating costs and the strong Singapore dollar, which are placing financial pressure on retailers and the food and beverage (F&B) sector.
Retail Sales Performance: Fluctuations and Rebounds
Retail sales, excluding motor vehicles, experienced fluctuations throughout the first half of 2024. Following a strong rise in Q1, total retail sales fell from S$3.5 billion in March to S$3.3 billion in April. However, spending rebounded to S$3.6 billion in May, driven by increased consumer expenditure, particularly in food and beverages.
Despite this rebound, the retail environment remains challenging. Online retail sales, which had been a strong performer, saw a slight decline from 14.2% in March to 13.7% in April, and further to 13.4% in May. This trend underscores the adjustments retailers are making in response to evolving market conditions. The remainder of 2024 will be crucial in determining whether the initial boost from international concerts will have lasting effects on the retail sector.
The Growing Importance of Mall Identity
In Singapore’s competitive retail landscape, mall identity is becoming increasingly crucial. The market has seen the entry of several international brands, including Hunter, a British footwear retailer at Plaza Singapura, and Hoka, a French sportswear brand at ION Orchard. Additionally, new F&B establishments like Ipoh Town and Kebuke are making their mark.
Despite these new entrants, the retail sector faces challenges, including a higher number of business cessations compared to new formations. In Q2 2024, 2,502 new retail and F&B businesses were established, while 2,631 ceased operations, marking a net decline of 129 entities. This represents a shift from the previous quarter’s growth, indicating potential difficulties ahead.
To stand out, malls must develop unique identities and offer distinctive experiences. Generic mall concepts and similar tenant mixes have led to a homogeneous shopping environment. Malls like One Holland Village, which is known for its pet-friendly atmosphere and sustainable design, exemplify how a unique identity can attract a diverse shopper base and drive footfall from beyond the immediate catchment area.
| Exhibit 1: Average Gross Rents of Prime Retail Spaces*, Q2 2024LOCATION AVERAGE GROSS RENT Q-O-Q CHANGE Y-O-Y CHANGE OF PRIME SPACES (%) (%)(S$ PSF PM) | |||
| Island-wide | $27.40 | 0.9% | 3.8% |
| Orchard | $30.70 | 0.6% | 3.3% |
| Marina Centre, City Hall, Bugis | $25.50 | 1.0% | 4.0% |
| City Fringe | $23.70 | 1.3% | 3.9% |
| Suburban | $26.50 | 1.2% | 4.6% |
Source: Knight Frank Research*Prime retail spaces refer to rental-yielding units between 350 sf and 1,500 sf with the best frontage, connectivity, footfall and accessibility in a mall, typically located on the ground level and/or the basement level of a retail mall that is linked to an MRT station or bus interchange. Average gross rents of prime retail spaces are rounded to the nearest S$0.10. | |||
Market Outlook: Slower Growth Expected
Looking ahead, prime retail rents are expected to rise by 2% to 4% for the remainder of 2024. While retail rents and occupancy levels are projected to continue their upward trend, the pace of growth will likely be moderate. Rising rents and operational costs are increasingly deterring some retailers from expansion, potentially leading to consolidation in the sector.
As Singapore’s retail landscape evolves, the ability of malls to differentiate themselves and adapt to changing consumer preferences will be key to sustaining growth and attracting both international brands and shoppers.
About Knight Frank Singapore
Knight Frank LLP is a premier global property consultancy, headquartered in London with over 25,000 employees across 604 offices in 58 countries. It serves a diverse clientele including individual owners, buyers, developers, investors, and corporate tenants. In Singapore, Knight Frank operates through its head office and two subsidiaries: Knight Frank Property & Facilities Management and KF Property Network. For more information, visit www.knightfrank.com.sg.
