Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
In its 4Q2022 market report, Knight Frank mentions that prime retail areas in the Orchard Road place led the way in regards to lease growth, charting an increase of 3.1% y-o-y in 4Q2022 to $29.10 psf each month, followed by prime retail area in the Marina Centre, City Hall together with Bugis sub-market which registered a development of 2.6% y-o-y to $23.90 psf monthly. The rise in rents was sustained by an increase in global visitors arrivals, along with the return of employees went back to the workplace.
A different report by Edmund Tie Research also feature records even more indicating the fortifying of need for retail spaces in the Orchard location. Based upon retail possessions tracked by the consultancy, prime first-storey retail area on Orchard and also Scotts Roadway saw the strongest rental growth of 7.4% for the whole of 2022 to $39.20 psf each month. In the edge and suburban areas, leas grew by 6.7% in 2022 to $33.10 psf per month, while in some other city places, it expanded by 3.7% to $19.20 psf monthly, based upon Edmund Tie’s information.
Edmund Tie’s report in addition explains that in 3Q2022, islandwide final absorption for retail places appeared at 323,000 sq ft, a four-fold increase from the 86,000 sq ft enrolled the previous quarter, signalling reinforcing demand.
According to information compiled by Knight Frank Research study, prime market leas island-wide climbed up 1.7% q-o-q in 4Q2022 to hit approximately $26.10 psf per month. This brings full-year prime retail rental development to 2.6% for 2022.
Knight Frank’s Hsu is also forecasting prime retail rents to carry on expanding this year, indicating that the retail industry field is “in a better placement right now”, even thinking about the boost in the Goods and Services Tax (GST) and also a much more low-key economic overview. “So long as there are no size restricts to gatherings and quarantine responsibilities for cross boundary returns, prime rents of retail area are most likely to expand in between 3% and 5% for the entire of 2023, with the prime purchasing belt Orchard Road leading the improvement,” he anticipates.
The recovery of the Singapore retail market gained momentum in the last half of previous year, thanks to social distancing strategies being calmed and also boundaries reopening. “The retail field sustained and has come through a very challenging period of unprecedented obstacle, just commencing to obtain grip from the clearing of steps from 2Q2022 onwards,” remarks Ethan Hsu, Knight Frank Singapore’s head of retail industry.
The consultancy is forecasting prime first-storey retail leas in Orchard and Scotts Road to maintain its progression of in between 7% and 9% in 2023, while rentals in different retail sub-markets are expected to grow in between 3% and 6%.
Lam Chern Woon, head of research and consulting at Edmund Tie, expects a brighter year ahead for the retail real estate market, helped by the continued recovery in the tourist field. “With the quantity of the source pipeline slated to find onstream in 2023, including The Woodleigh Shopping mall, and even retail stores at One Holland Village, Guoco Midtown along with IOI Central, the supply-demand dynamics are expected to be stabilized this year,” he adds.