Occupier demand in the broader retail market remains firm

• Retail sales and F&B sales performances lost momentum in Q2 2024 as the dampening effects of inflation and the consumption tax hike continued to weigh on consumer sentiment. The tourism market remains on track for recovery.
• Despite the cautious consumer sentiment, occupier demand in the broader retail market remained firm in Q2 2024. We observed expansion from diverse trade groups, led by food & beverage, active lifestyle and beauty and wellness operations.

New mall opens with healthy pre-commitment rate

• The retail stock rose q-o-q in Q2 2024 due to the opening of Pasir Ris Mall in June 2024. The healthy pre-commitment rate at this new mall underscores the firm occupier demand for retail space.
• Optimism about tourism growth, the recovery in MICE activities, the healthy workforce footfall, and sustained domestic demand continued to bolster occupier demand for retail space. This led to a q-o-q decline in the islandwide vacancy rate in Q2.

Retail rents and capital values extend growth in Q2 2024

• Rents of prime floor space continued to rise q-o-q in Q2 2024, marking the 11th consecutive quarter of growth across all submarkets, driven by firm occupier demand, low vacancy rates and proactive asset management by landlords.
• Underpinned by rent growth and relatively stable yields, capital values of prime floor space rose q-o-q in Q2 2024 across the three submarkets for the second consecutive quarter.

Outlook: Retail rents and capital values to continue growing

• Firm occupier demand amid moderated supply is expected to drive vacancy rates lower. Sustained domestic consumption, supported by the tight labour market, and the positive tourism outlook should continue to spur business expansion in Singapore.
• Tightening vacancy rates and firm occupier demand should support rent growth. A rent growth outlook, a scarcity of quality retail assets coupled with investor interest and capital allocation towards retail assets should underpin capital value growth.