Retail occupier demand softens in Q4 2025

• Uplift in retail sales performance sustains by improvement in discretionary spending as the Formula One race and year end festivities boosted demand. However, consumer confidence remains cautious while tourism market recovery remains on track.
• In the broader retail market, occupier demand uneven across the assets. Besides closures, the challenging operating environment and shifting consumer behaviors have led retailers to seek more affordable options. Overall demand has softened.

Vacancy rate rises islandwide but remains contained as landlords preserve occupancy in Q4 2025

• Softer occupier demand meeting modest supply unleashed from asset improvements, drives islandwide vacancy rate higher q-o-q in Q4 2025. The rise in vacancy rate remains contained as landlords prioritise occupancy amid uncertain externalities.
• Vacancy rate in the Suburban submarket rose 0.1 percent points q-o-q in Q4 2025 driven by retail closures of underperforming stores particularly at non-prime locations. Prime submarket vacancy held while that in the Secondary dipped in the quarter.

Stable occupier demand for prime level space supports rents in Q4 2025

• Stable occupier demand for prime level alongside proactive asset management by landlords, sustained rental rates of prime floor space q-o-q in Q4 2025. Stronger growth is recorded in the Secondary submarket backed by the return to office trend.
• Capital values of prime level space across the Prime and Secondary submarkets mirrored the rent trend in Q4 2025 as yields remained stable. Suburban submarket recorded higher growth as yield compressed on the back of stronger deal flow in Q4 2025.

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

• Persistently high operational costs and weaker domestic consumer confidence, due to the softer economic and hiring outlook, are expected to put a drag on business viability, leading to more retail closures. Vacancy to rise despite moderated supply.
• The softer external economic outlook is expected to cap rent growth, with variation by submarket shored by non-discretionary spending. The rent outlook will support capital values, supporting a stable yield and a positive spread over funding cost.