Weakened occupier demand for retail space

• Retail sales performance picked up likely due to the one-off boost from the ‘SG60’ SGD 600 consumption-stimulus vouchers issued in July 2025. By and large, consumer spending remained cautious. The tourism market continues to recover.
• In Q3 2025, occupier demand in the broader retail market weakened q-o-q as the challenging operating environment and changing consumer preferences led to a series of retail business closures and cessation of underperforming stores.

Islandwide vacancy rate rises in Q3 2025 but remains contained as landlords preserve occupancy rates

• The weakened occupier demand drove the islandwide vacancy rate higher q-o-q in Q3 2025, despite a lack of new supply. The rise in vacancy rate, however, remained contained as landlords prioritised preserving occupancy amid tepid economic conditions.
• Vacancy rates in the Prime and Suburban submarkets rose q-o-q in Q3 2025 due to retail closures of underperforming stores, particularly at non-prime store locations. The vacancy rate in the Secondary submarket dipped marginally q-o-q in the quarter.

Sustained occupier demand for prime floor space supports rents in Q3 2025

• Sustained occupier demand for prime floor space and proactive asset management by landlords supported stable if not modest rent growth of prime floor space q-o-q in Q3 2025, depending on the submarket.
• Capital values of prime floor space across the three submarkets mirrored the rent trend in Q3 2025 as yields remained stable q-o-q supported by investors seeking a yield spread over funding costs.

Outlook: The rent outlook for prime floor space will underpin capital values with stable yields

• Persistently high operational costs and reduced retail spending, due to the softer economic and hiring outlook, are expected to threaten business viability, leading to more retail closures and a rise in vacancy rates, despite moderated supply.
• The weakened occupier outlook is expected to keep rents flat or cap rent growth, depending on the submarket. The rent outlook will support capital values with yields expected to hold stable supporting a positive yield spread over funding costs.