APPD Market Report Article


August 26, 2022

Angelia Phua, Director - Research, Singapore


SGD 35.6


Consumption growth increases with the easing of restrictions

  • The government continued to relax domestic COVID-19 measures and travel restrictions in April 2022, following extensive easing in March 2022, as the nation transitions towards endemic COVID-19. This accelerated the pace of domestic consumption and tourist spending as visitor arrivals increased, further underpinning the retail market recovery.
  • In 2Q22, the retail sales index (excluding motor vehicles) in chained-volume terms rose an encouraging 16.4% y-o-y, compared to a growth of 8.7% y-o-y in 1Q22. The accelerated growth was largely boosted by higher tourist spending following the easing of border restrictions. Visitor arrivals grew m-o-m in June 2022 for the fifth consecutive month.

Vacancy rates fall across all the submarkets in 2Q22

  • Retail stock remained stable in 2Q22, as there were no new openings of retail malls in the quarter.
  • Singapore’s transition to endemic COVID-19 and its pandemic preparedness further boosted retailer confidence, which in turn spurred business expansion. As a result, in 2Q22, vacancy rates in the Prime submarket fell q-o-q for the fifth consecutive quarter while those of the Secondary and Suburban submarkets declined q-o-q, after rising q-o-q in 1Q22.

Rent growth accelerates in 2Q22 across all three submarkets

  • The pace of rent growth for prime floor space accelerated across all submarkets in 2Q22, in response to falling vacancy rates and improved retailer confidence following the large-scale easing of COVID-19 measures and travel restrictions.
  • The growth in tourist arrivals and the lifting of workplace limits, which allow the return of all employees to their workplaces, lifted sentiments and supported rents in the Prime and Secondary submarkets. Rents of prime floor space in the Suburban submarket rose for the fourth consecutive quarter as local resident demand remained healthy and improving business optimism supported rents.

Outlook: Retail rent recovery to gain traction

  • Singapore’s commitment to reopening the economy and transitioning towards endemic COVID-19 should continue to lift retailer and consumer confidence. Domestic consumption growth and a recovery in tourism should continue to spur business expansion in 2H22 amid a sustained economic reopening, despite inflationary concerns. Vacancy rates should fall in 2H22, and y-o-y in 2022, amid tight supply.
  • Rents are expected to stay on the growth path in 2H22, amid falling vacancy rates as the retail market outlook improves. A positive rent outlook and a scarcity of quality retail assets should underpin retail asset prices in 2022, notwithstanding an expansionary yield outlook.

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

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