Singapore’s retail property market is projected to experience a slowdown in rental growth by the end of the year due to weaker-than-expected consumer spending. According to Alan Cheong, executive director of research and consultancy at Savills Singapore, consumer spending has been relatively weak in 2024, with most monthly retail and F&B sales experiencing negative year-on-year changes.
Cheong predicts a 2% increase in rents for prime Orchard Road properties by the end of the year, which falls short of the initial forecast of 3% to 5% growth by Savills at the beginning of the year. The rental forecast for suburban retail properties remains flat, in line with the initial projection.
However, recent research by DBS and Singapore Management University (SMU) shows that consumer concerns over inflation have mostly subsided in the last few quarters. The research, conducted by SMU’s Sim Kee Boon Institute for Financial Economics (SKBI), suggests that most Singaporeans expect inflation to stabilize in the coming months due to a global economic slowdown, high interest rates, and a potential easing of supply chain disruptions.
Despite a busy schedule of concerts and events in Singapore this year, retail spending and rental rates have not seen significant support. CBRE’s research shows that while headline concerts by international stars like Taylor Swift and Coldplay attracted large numbers of foreign attendees, other events like conferences and exhibitions did not have a comparable impact on retail activity.
CBRE observed that business event attendees tend to stay solely at the event venue, and even major events like the Formula One Grand Prix did not significantly increase foot traffic in nearby malls. However, Sulian Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore, notes that the country’s reputation as a regional hub continued to attract new-to-market brands this year, such as KSisters, The Pace, Brands for Less, and Hoka.
The wellness sector is also evolving, with new concepts like Rekoop and Hideaway, and there have been numerous new F&B concepts introduced, such as Sushi Samba, Blue Bottle, Grey Box, and Puzzle Coffee. Tan-Wijaya also notes the emergence of new wellness concepts and entertaining restaurants, which have contributed to the vibrancy of Singapore’s dining scene.
Looking ahead, Tan-Wijaya and Cheong anticipate continued growth in demand for retail spaces, particularly in central Singapore, supported by new-to-market brands and rising consumer confidence in the retail market. Retail landlords may also have more flexibility next year to adjust rental rates, as the supply of new retail spaces becomes more limited. This will allow them to strategize and position their malls to remain relevant in the rapidly evolving consumption patterns of both locals and tourists.
Similarly, more retailers are expected to optimize their real estate strategies next year, such as right-sizing their spaces, establishing kiosks, closing under-performing branches, or shifting operations to central kitchens. According to Cheong, the trend of new-to-market F&B brands entering Singapore is expected to continue in the first half of 2025, providing strong momentum for the retail market.