APPD Market Report Article


May 26, 2024

Angelia Phua, Director - Research, Singapore


SGD 37.1


Domestic consumption and tourism growth support occupier demand

  • In 1Q24, the retail sales index (excluding motor vehicles) in chained volume terms, rose 1.7% y-o-y, reversing the 2.7% y-o-y fall in 4Q23, largely supported by festive spending during the Lunar New Year in February. In 1Q24, Singapore had nearly 4.4 million visitor arrivals, representing an estimated 93% of 1Q19’s figures. Visitor arrivals in March 2024 rose m-o-m for the fourth straight month.
  • Occupier demand in the broader retail market remained firm in 1Q24. Retail operations with a long-term perspective continued to expand. We observed expansion from a range of trade groups, including food & beverage vendors, active lifestyle/sports-related operations and beauty and wellness establishments.

Islandwide vacancy rate remains low in 1Q24

  • The retail stock remained stable in 1Q24, as there were no new openings of retail malls in the quarter. The future retail supply remains moderated in the medium term and the Suburban submarket is expected to contribute the bulk of the supply.
  • While overall occupier demand remained firm, business consolidations in selected malls in the Prime and Secondary submarkets drove vacancy rates in these submarkets higher q-o-q in 1Q24. Vacancy rates in the Suburban submarket, however, remained flat q-o-q in 1Q24, underpinned by healthy occupier demand in many suburban malls despite several business consolidations.

Retail rent growth extends in 1Q24 across the three submarkets

  • Rents of prime floor space continued to rise q-o-q in 1Q24, marking the tenth consecutive quarter of growth across all submarkets.
  • Sustained tourism growth, healthy workforce foot traffic and the recovery in MICE activities, continued to underpin rent growth in the Prime and Secondary submarkets. Sustained consumption by residents, supported by a relatively tight labour market, underpinned business confidence which lifted rents in the Suburban submarket.

Outlook: Retail rents to remain on a growth path

  • Retailers are expected to adopt a more cautious approach to expansion in view of macroeconomic headwinds. Sustained domestic consumption and the positive tourism outlook (business and leisure), however, should continue to attract new brands and spur the strategic expansion of existing brands in Singapore, thereby driving occupier demand for retail space.
  • With positive net space absorption amid moderated retail supply, vacancy rates are expected to trend lower and, in turn, underpin rent growth in 2024. A rent growth outlook, a scarcity of quality retail assets coupled with growing investor interests and capital allocation towards retail assets should underpin capital value growth.

Note: Singapore Retail refers to Singapore's Prime, Secondary and Suburban retail markets.

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