Retail rents in Singapore’s Orchard Area to grow by 3-4% in 2024

And average rents in the Suburban Area are expected to stay flat.

The tourism recovery in Singapore is likely to continue till the end of the year, with higher visitor arrivals and tourism receipts from last year. According to a Savills report, although visitors from our largest market are still below pre-pandemic levels, arrivals from China in 1H/2024 have recovered to 80% of 1H/2019. 

“Despite the optimistic projection of tourism numbers, the majority of consumption in Singapore is still driven by domestic spending. Coupled with competition from neighbouring countries and more cautious spending trends amid economic uncertainty, consumer spending in Singapore is expected to remain muted,” the report added.

Here’s more from Savills:

While many Chinese F&B chains are bringing their brand to Singapore and looking to expand here due to intense competition in the mainland market, the local F&B scene remains challenging. Alongside rising manpower and operating costs, some existing F&B players struggle to stay afloat, while some chains shrink their physical footprint. For instance, Prive restaurant which has presence across Singapore, has recently shut their outlets at Katong and Robertson Quay. 

Notwithstanding the tight supply pipeline in the near term and tourism recovery, rental growth is likely to continue to decelerate for the rest of the year. Labour supply issues and rising operating costs are returning to dog the industry. 

Owing to the slower rental growth in 1H/2024, the upper bound of our rental forecast for Orchard Area is revised down for this year, from 3% - 5% to 3% - 4% YoY in 2024. Although the healthy take-up in the new Pasir Ris Mall shows the resilience of the Suburban Area, average rents in the Suburban Area are projected to stay flat in 2024.