APPD Market Report Article


February 22, 2024

Angelia Phua, Director - Research, Singapore


SGD 36.9


Occupier demand remains resilient across all submarkets

  • Retail sales performance remained muted due to inflationary factors. In 4Q23, the retail sales index (excluding motor vehicles) in chained volume terms, contracted 2.3% y-o-y, a reversal from the 1.1% y-o-y growth in 3Q23. Tourist arrivals of 13.6 million in 2023 achieved close to the upper end of the government’s full-year target of 12 to 14 million.
  • Despite the soft economic conditions, occupier demand remained firm in 4Q23. Retail operations with a long-term perspective continued to expand. We saw expansion from a range of trade groups, including food & beverage vendors, fashion apparel brands and beauty and wellness services. The opening of One Holland Village in 4Q23 with full occupancy is a testament to the strength of occupier demand.

Vacancy rates extend decline amid measured supply conditions

  • The opening of One Holland Village in December 2023 contributed to the increase in the Suburban retail stock in 4Q23. The future retail supply remains measured in the medium term and the Suburban submarket is expected to contribute the bulk of the supply.
  • Vacancy rates in the Prime submarket fell q-o-q for the fourth straight quarter, fuelled by rejuvenation efforts and the return of international visitors that have bolstered retailer confidence and occupier demand. Vacancy rates in the Secondary and Suburban submarkets extended their decline for the seventh straight quarter, despite several business consolidations. 

Retail rent growth extends in 4Q23 on tightening vacancy rates

  • Rents of prime floor space continued to rise q-o-q in 4Q23, marking the ninth consecutive quarter of growth across all submarkets.
  • The ongoing tourism recovery, the healthy workforce foot traffic and the recovery in Meetings, Incentives, Conferences, and Exhibitions activities, continued to underpin rent growth in the Prime and Secondary submarkets. The resilient domestic consumer market, supported by a tight labour market, underpinned business confidence which lifted rents in the Suburban submarket.

Outlook: Firm occupier demand to drive rent growth in 2024

  • While the tepid economic outlook could lead to greater caution in retailers’ expansion plans, sustained domestic consumption and the ongoing tourism recovery (business and leisure) should continue to attract new brands and spur the strategic expansion of existing brands. This, in turn, should underpin occupier demand for retail space.
  • Vacancy rates should continue to fall on the back of positive net space absorption and measured supply and, in turn, support rent growth in 2024. A rent growth outlook, a scarcity of quality retail assets and 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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