Prime retail rents to see further recovery in 2023, with Orchard Road leading the way

In its 4Q2022 retail statement, Knight Frank indicates that prime retail spaces in the Orchard Road place led the way in regards to rental progress, charting a rise of 3.1% y-o-y in 4Q2022 to $29.10 psf each month, adhered to by prime retail area in the Marina Centre, City Hall together with Bugis sub-market which signed up a growth of 2.6% y-o-y to $23.90 psf monthly. The surge in rents was supported by a rise in international visitors arrivings, in addition to the return of employees returned to the office.

The rehabilitation of the Singapore retail industry market obtained force in the latter part of last year, thanks to social distancing strategies being soothed and also borders restarting. “The retail field endured and has indeed withstood an extremely challenging time of unparalleled challenge, just starting to gain grip from the clearing of steps from 2Q2022 ahead,” comments Ethan Hsu, Knight Frank Singapore’s head of retail.

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The consultancy is forecasting prime first-storey retail rentals in Orchard along with Scotts Road to sustain its growth of between 7% also 9% in 2023, while leas in another retail sub-markets are expected to expand in between 3% and also 6%.

According to records assembled by Knight Frank Research study, prime retail rentals island-wide climbed 1.7% q-o-q in 4Q2022 to get to an average of $26.10 psf monthly. This brings full-year prime retail leasing development to 2.6% for 2022.

A different write up by Edmund Tie Research also highlights data better indicating the conditioning of need for retail industry spaces in the Orchard location. Based on retail possessions tracked by the consultancy, prime first-storey retail location on Orchard and Scotts Road saw the strongest 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 grew by 3.7% to $19.20 psf monthly, based on Edmund Tie’s information.

Lam Chern Woon, head of research and consulting at Edmund Tie, projects a more vibrant year in advance for the retail property market, sustained by the continued recovery in the tourism market. “With the majority of the supply pipe slated to come onstream in 2023, including The Woodleigh Shopping center, and retail stores at One Holland Village, Guoco Midtown and IOI Central, the supply-demand aspects are expected to be stabilized this year,” he includes.

Edmund Tie’s record also mentions that in 3Q2022, islandwide net absorption for retail spaces appeared at 323,000 sq ft, a four-fold rise from the 86,000 sq ft registered the preceding quarter, signalling enhancing need.

Knight Frank’s Hsu is also predicting prime retail rentals to carry on increasing this year, indicating that the retail industry market is “in a far better setting now”, also taking into account the boost in the Goods and Services Tax (GST) and a more low-key economic overview. “As long as there are no dimension limits to gatherings and quarantine guidelines for cross border arrivals, prime rents of retail space are most likely to expand between 3% and 5% for the entire of 2023, with the prime purchasing belt Orchard Road leading the recovery,” he predicts.

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