Firm occupier market conditions in Q4 2024 despite cautious consumer sentiment

• Consumption leakage arising from outbound travel and the strength of the Singapore dollar, and cautious consumer spending due to inflationary pressure continued to weigh on the retail sales performance. The tourism market remains on a recovery track.
• Occupier demand in the retail market remained firm in Q4 2024 despite the cautious consumer sentiment. Diverse trade groups, led by food & beverage, health & wellness, fashion and active-lifestyle & sports-related operations, continued to expand.

Islandwide vacancy rate in Q4 2024 lowest since Q3 2012

• The retail stock remained stable q-o-q in Q4 2024 as there were no new space additions or withdrawals during the quarter.
• The islandwide vacancy rate fell q-o-q in 4Q24 for the third straight quarter. The continuous tourism growth, the buoyant MICE activities, the healthy workforce footfall and sustained domestic demand underpinned occupier demand for retail space.

Rents and capital values growth extend in Q4 2024

• Rents of prime floor space across all submarkets rose q-o-q in Q4 2024, marking the 13th consecutive quarter of collective increase, driven by firm occupier demand, low vacancy rates and proactive asset management by landlords.
• Rent growth and marginal yield compression amid lower interest rates drove the q-o-q capital value growth of prime floor space across the three submarkets in Q4 2024, marking the fourth straight quarter of increases.

Outlook: Rent growth will drive capital value growth as yields are expected to hold stable

• Sustained domestic spending, a positive tourism outlook and Singapore’s draw as a business hub for regional growth should spur retail expansion in Singapore and, in turn, keep vacancy rates low amid moderated supply, while supporting rent growth.
• Rent growth to drive capital value growth with yields expected to hold stable, supporting investors seeking a yield spread over funding costs in an elevated interest rate environment where rate cuts could be less-than-expected.