APPD Market Report Article


February 28, 2022


SGD 35.3


Retail sales hold firm despite COVID-19-related restrictions

  • In 4Q21, the retail sales index (excluding motor vehicles) in chained-volume terms rose by 8.2% y-o-y. The firm consumer spending is a sign of improved consumer confidence despite the tightened COVID-19-related measures from 27 September to 21 November 2021. Retail sales value (excluding motor vehicles) in 4Q21 rose marginally above pre-COVID-19 (4Q19) levels
  • Despite the tightened COVID-19 measures in 4Q21, the government’s roadmap for an endemic COVID-19 and the establishment of Vaccinated Travel Lanes (VTL) led to improved retailer confidence. Encouraged by the potential rise in shopper traffic as the economy progressively reopens, retailers with strong balance sheets are once again considering business expansions, albeit cautiously.

Vacancy rates continue to fall in 4Q21

  • I12 Katong will officially reopen in March 2022, following refurbishment work. However, a section of the mall held a soft launch in December 2021, ahead of the year-end festive period.
  • Amid improved occupier demand, overall vacancy rates fell q-o-q in 4Q21 for the third consecutive quarter, as opportunistic businesses with deeper pockets capitalised on the attractive rents and the availability of choice retail locations. On the back of falling vacancy rates, landlords became selective in compromising on lease terms.

Rents rise across the three submarkets

  • In response to falling vacancy rates, rents of prime floor space rose modestly q-o-q across the three submarkets in 4Q21, after stabilising or rising marginally in 3Q21, depending on the submarkets. Rents were also underpinned by cautious but growing optimism regarding Singapore’s commitment to gradually reopen the economy.
  • In 4Q21, the potential rise in tourism demand in the Prime submarket from the establishment of VTLs, and a pick-up in domestic demand in less office-centric malls in the Secondary submarket supported rents. Rents in the Suburban submarket also rose q-o-q in 4Q21, as suburban malls continued to serve local demand with essential services.

Outlook: Rent recovery to extend into 2022

  • A high vaccination rate, combined with the government’s roadmap for endemic COVID-19 will continue to support the further lifting of COVID-19-related measures and the gradual easing of border restrictions. This will further boost consumer and retailer sentiment and, in turn, drive retail sales and business expansion. Thus, vacancy rates are expected to continue to fall in 2022.
  • Rents are expected to extend their recovery in 2022 amid falling vacancy rates as the retail outlook improves with the gradual reopening of the Singapore economy. Capital values are expected to grow in 2022 on the back of an expected rent recovery in 2022, the scarcity of quality assets for sale and investor interest.

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

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