Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
In its 4Q2022 retail record, Knight Frank notes that prime retail spaces in the Orchard Road place led the way in terms of rental growth, charting a rise of 3.1% y-o-y in 4Q2022 to $29.10 psf per month, complied with by prime retail space in the Marina Centre, City Hall and even Bugis sub-market which signed up an expansion of 2.6% y-o-y to $23.90 psf each month. The rise in leas was supported by an increase in international tourist arrivals, in addition to the return of laborers returned to the workplace.
The rehabilitation of the Singapore retail store market obtained force in the latter part of last year, regards to social distancing actions being calmed and boundaries resuming. “The retail industry withstood and has come through a very difficult time of unparalleled difficulty, only commencing to obtain traction from the removal of procedures from 2Q2022 along,” remarks Ethan Hsu, Knight Frank Singapore’s head of retail.
According to data compiled by Knight Frank Research study, prime retail rentals island-wide climbed up 1.7% q-o-q in 4Q2022 to hit approximately $26.10 psf each month. This brings full-year prime retail rental growth to 2.6% for 2022.
A separate report by Edmund Tie Research also highlights information further pointing to the fortifying of need for retail rooms in the Orchard location. Based upon retail assets tracked by the consultancy, prime first-storey retail area on Orchard and also Scotts Roadway saw the toughest rental growth of 7.4% for the whole of 2022 to $39.20 psf monthly. In the fringe together with suburbs, leas grew by 6.7% in 2022 to $33.10 psf monthly, while in other city areas, it expanded by 3.7% to $19.20 psf monthly, based upon Edmund Tie’s data.
Edmund Tie’s record even points out that in 3Q2022, islandwide final absorption for retail places appeared at 323,000 sq ft, a four-fold rise from the 86,000 sq ft signed up the preceding quarter, signalling enhancing need.
Knight Frank’s Hsu is also forecasting prime retail rentals to continue increasing this year, mentioning that the retail industry field is “in a far better position right now”, even taking into account the rise in the Goods and Services Tax (GST) and an extra soft financial overview. “So long as there are no size controls to celebrations and quarantine responsibilities for cross boundary arrivals, prime rentals of retail area are likely to expand in between 3% and also 5% for the entire of 2023, with the prime purchasing belt Orchard Road leading the recovery,” he anticipates.
Lam Chern Woon, head of research and consulting at Edmund Tie, anticipates a brighter year forward for the retail real estate market, supported by the proceeded recovery in the tourism field. “With the majority of the supply pipe slated to find 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 anticipated to be stabilized this year,” he includes.
The consultancy is anticipating prime first-storey retail rentals in Orchard and Scotts Roadway to sustain its growth of between 7% also 9% in 2023, whilst rentals in another retail sub-markets are expected to grow in between 3% and also 6%.