New global retailers drive Singapore’s retail property growth

July 4, 2023 / By  

Singapore is a well-established market for international brands. Yet it witnesses rising interest from new international brands establishing a presence in the city-state, leading to a new source of demand for retail space alongside organic growth from existing brands.

Leasing inquiries from new international retail brands, including those from China, Taiwan and the United States, have been growing since the start of 2023. Food & Beverage concepts targeting the well-heeled and aspirational mass-affluent consumers dominate these inquiries besides lifestyle-related retailers.

The growing interest stems from various reasons:

Growing foreign resident population and relocation of private wealth into Singapore

Singapore’s growing pool of wealthy foreign residents and well-paid working professionals attract brands to Singapore. Interestingly, more international brands are eyeing the prospect of establishing a presence in Singapore and following existing foreign consumers as they relocate or spend a meaningful part of their time here. Brands that have opened recently include Taiwanese jeweller Aluxe Jewelry, Hong Kong jeweller Dejade, and The Onitsuka, a Japanese luxury footwear brand.

The uncertain global geopolitical climate has continued to attract family offices setting up in Singapore, with a fivefold increase from 2017 to 2019, and a 75% increase from 400 at end-2020 to 700 at end-2021, according to government estimates.

Furthermore, according to the Ministry of Manpower, Singapore’s attractiveness as a foreign talent hub has seen the number of professionals[1] working in Singapore increase by 15.8% y-o-y to 187,300 at end-2022, about 97% of the pre-Covid (2019) level, boding well for affluent retail consumption.

Conducive business environment provides a launchpad for regional growth

Singapore has a competitive edge over other key Asian cities, including Hong Kong, for new entrants starting expansion in Asia because of the city-state’s business-friendly reputation, led by its legal framework, connectivity with its strategic location in the heart of Southeast Asia and political stability. In March 2023, Luckin Coffee from China opened its first two stores in Singapore, with plans for eight more stores in the city-state and growth in the region. Meanwhile, Tim Hortons[2], the Canadian coffee chain, is in the midst of establishing its retail presence in Singapore as it too plans to expand in Southeast Asia. Grand Seiko, the Japanese luxury watchmaker, opened its first independent boutique in Singapore, which will be its headquarters for the Asia-Pacific region.

Perceived spending power of domestic consumers

While lacking in market size, international brands are drawn to Singapore by the perceived spending power of Singapore consumers, their desire to try new things and their lifestyle aspirations. Singapore is the third-wealthiest country globally, based on gross domestic product-purchasing power parity (GDP-PPP) per capita ranking, according to Global Finance magazine.

A flurry of new-to-market international brands will excite consumers with refreshed offerings and bolster occupier demand for retail space in Singapore.

[1] Professionals based on employment pass holders in Singapore. Eligibility for new applicants of employment passes includes earning a salary of at least SGD 5,000, effective 1 September 2022, according to the Ministry of Manpower.
[2] Tim Hortons’ expansion in Singapore is via an exclusive agreement between Restaurant Brands International (owner of the coffee chain) and Marubeni Growth Capital Asia; both parties are planning to expand the chain’s presence into Malaysia and Indonesia. Tim Hortons opened its first Southeast Asia outlets in the Philippines in 2017 and in Thailand in 2020, but these were channelled through different franchise agreements.

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