Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
The recovery of the Singapore retail industry market got force in the last half of previous year, thanks to social distancing actions being calmed and also borders restarting. “The retail market sustained and has withstood a very challenging time of unprecedented difficulty, just starting to acquire grip from the clearing of steps from 2Q2022 ahead,” comments Ethan Hsu, Knight Frank Singapore’s head of retail.
Lam Chern Woon, head of research and consulting at Edmund Tie, expects a more vibrant year forward for the retail estate market, supported by the continued healing in the tourism field. “With the quantity of the source pipe slated to come onstream in 2023, consisting of The Woodleigh Shopping center, and retail stores at One Holland Village, Guoco Midtown along with IOI Central, the supply-demand characteristics are expected to be balanced this year,” he adds.
In its 4Q2022 retail statement, Knight Frank mentions that prime retail areas in the Orchard Road area led the way in relations to lease development, laying out a boost of 3.1% y-o-y in 4Q2022 to $29.10 psf monthly, complied with by prime retail room in the Marina Centre, City Hall and even Bugis sub-market which registered a growth of 2.6% y-o-y to $23.90 psf monthly. The increase in leas was sustained by a rise in foreign tourist arrivals, as well as the return of laborers returned to the office.
Edmund Tie’s report also mentions that in 3Q2022, islandwide net engagement for retail spaces appeared at 323,000 sq ft, a four-fold increase from the 86,000 sq ft registered the prior quarter, signalling strengthening necessity.
According to information put together by Knight Frank Research study, prime retail rentals island-wide climbed 1.7% q-o-q in 4Q2022 to hit around $26.10 psf each month. This brings full-year prime retail leasing development to 2.6% for 2022.
A different statement by Edmund Tie Research also emphasize records even more pointing to the conditioning of need for retail industry areas in the Orchard area. Based on retail properties tracked by the consultancy, prime first-storey retail space on Orchard as well as Scotts Roadway viewed the strongest rental development of 7.4% for the whole of 2022 to $39.20 psf each month. In the edge together with suburbs, rents grew by 6.7% in 2022 to $33.10 psf each month, while in various city locations, it increased by 3.7% to $19.20 psf each month, based on Edmund Tie’s data.
The consultancy is forecasting prime first-storey retail leas in Orchard along with Scotts Roadway to maintain its progression of between 7% also 9% in 2023, even though rents in different retail sub-markets are expected to develop between 3% as well as 6%.
Knight Frank’s Hsu is also projecting prime retail rentals to carry on expanding this year, noting that the retail industry market is “in a far better position currently”, also considering the boost in the Goods and Services Tax (GST) and a better low-key economical overview. “As long as there are no dimension controls to celebrations and quarantine responsibilities for cross boundary arrivings, prime leas of retail room are likely to grow in between 3% and also 5% for all of the of 2023, with the prime purchasing belt Orchard Road leading the rehabilitation,” he anticipates.
