Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
Lam Chern Woon, head of research and consulting at Edmund Tie, anticipates a better year forward for the retail real estate market, supported by the continued recovery in the tourism sector. “With the quantity of the supply pipeline slated to find onstream in 2023, consisting of The Woodleigh Shopping center, and even retail shops at One Holland Village, Guoco Midtown along with IOI Central, the supply-demand characteristics are expected to be balanced this year,” he adds.
Knight Frank’s Hsu is also forecasting prime retail leas to carry on growing this year, indicating that the retail market is “in a much better position currently”, also considering the rise in the Goods and Services Tax (GST) and a more soft economic outlook. “As long as there are no dimension controls to gatherings and quarantine guidelines for cross boundary returns, prime leas of retail space are most likely to grow in between 3% and 5% for the entire of 2023, with the prime purchasing belt Orchard Road leading the rehabilitation,” he forecasts.
The consultancy is predicting prime first-storey retail leas in Orchard and Scotts Road to sustain its growth of in between 7% and 9% in 2023, even though leas in other retail sub-markets are anticipated to grow in between 3% as well as 6%.
Edmund Tie’s report even mentions that in 3Q2022, islandwide net absorption for retail spaces clocked in at 323,000 sq ft, a four-fold increase from the 86,000 sq ft registered the prior quarter, signalling strengthening need.
According to information compiled by Knight Frank Research, prime retail rents island-wide climbed up 1.7% q-o-q in 4Q2022 to hit an average of $26.10 psf per month. This delivers full-year prime retail rental development to 2.6% for 2022.
A different statement by Edmund Tie Research also feature data even more indicating the strengthening of demand for retail industry areas in the Orchard area. Based upon retail assets tracked by the consultancy, prime first-storey retail location on Orchard and Scotts Road saw the strongest rental development of 7.4% for the entire of 2022 to $39.20 psf per month. In the edge together with suburbs, leas expanded by 6.7% in 2022 to $33.10 psf each month, while in other city areas, it grew by 3.7% to $19.20 psf per month, based upon Edmund Tie’s information.
The recovery of the Singapore retail industry market gained momentum in the latter half of previous year, thanks to social distancing strategies being calmed and also borders resuming. “The retail field endured and has actually survived an exceptionally hard time of unprecedented obstacle, just commencing to obtain traction from the removal of procedures from 2Q2022 ahead,” remarks Ethan Hsu, Knight Frank Singapore’s head of retail.
In its 4Q2022 retail record, Knight Frank notes that prime retail spaces in the Orchard Roadway area blazed a trail in terms of lease development, charting a boost of 3.1% y-o-y in 4Q2022 to $29.10 psf per month, adhered to by prime retail room in the Marina Centre, City Hall together with Bugis sub-market which signed up a development of 2.6% y-o-y to $23.90 psf monthly. The rise in leas was supported by a rise in international visitors arrivals, in addition to the return of workers came back to the workplace.