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

Knight Frank’s Hsu is also projecting prime retail rents to continue growing this year, indicating that the retail sector is “in a better placement currently”, even taking into consideration the rise in the Goods and Services Tax (GST) and also a more soft economical expectation. “As long as there are no size limits to celebrations along with quarantine responsibilities for cross boundary returns, prime leas of retail room are most likely to expand in between 3% and 5% for all of the of 2023, with the prime purchasing belt Orchard Road leading the rehabilitation,” he anticipates.

In its 4Q2022 market report, Knight Frank notes that prime retail spaces in the Orchard Road area blazed a trail in terms of rental development, laying out an increase of 3.1% y-o-y in 4Q2022 to $29.10 psf monthly, adhered to by prime retail area in the Marina Centre, City Hall and Bugis sub-market which registered a growth of 2.6% y-o-y to $23.90 psf each month. The increase in leas was sustained by a boost in global tourist arrivings, in addition to the return of workers came back to the office.

The consultancy is forecasting prime first-storey retail rentals in Orchard along with Scotts Road to sustain its progression of between 7% and 9% in 2023, while rentals in different retail sub-markets are prepared for to grow between 3% and 6%.

Lam Chern Woon, head of research and consulting at Edmund Tie, projects a brighter year ahead for the retail real estate market, sustained by the continued healing in the tourism industry. “With the quantity of the source pipeline slated ahead onstream in 2023, consisting of The Woodleigh Shopping mall, and even retail outlets at One Holland Village, Guoco Midtown as well as IOI Central, the supply-demand dynamics are expected to be balanced this year,” he adds.

Edmund Tie’s record in addition explains that in 3Q2022, islandwide final absorption for retail spots clocked in at 323,000 sq ft, a four-fold rise from the 86,000 sq ft enrolled the prior quarter, signalling strengthening necessity.

The improvement of the Singapore retail market gained momentum in the latter part of past year, thanks to social distancing measures being relaxed and borders reopening. “The retail industry endured and has withstood a very difficult period of unprecedented obstacle, only commencing to acquire grip from the clearing of procedures from 2Q2022 ahead,” comments Ethan Hsu, Knight Frank Singapore’s head of retail industry.

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According to data compiled by Knight Frank Research study, prime retail rents island-wide climbed up 1.7% q-o-q in 4Q2022 to hit around $26.10 psf per month. This carries full-year prime retail rental expansion to 2.6% for 2022.

A different statement by Edmund Tie Research also feature data even more pointing to the fortifying of interest for retail industry areas in the Orchard area. Based on retail assets tracked by the consultancy, prime first-storey retail location on Orchard as well as Scotts Roadway observed the strongest rental development of 7.4% for the entire of 2022 to $39.20 psf monthly. In the fringe together with suburban areas, rents expanded by 6.7% in 2022 to $33.10 psf each month, while in some other city places, it grew by 3.7% to $19.20 psf each month, based on Edmund Tie’s files.


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