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, projects a better year in advance for the retail real estate market, helped by the proceeded recovery in the tourist market. “With the bulk 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 and IOI Central, the supply-demand characteristics are anticipated to be adjusted this year,” he includes.
The rehabilitation of the Singapore retail industry market acquired force in the latter part of last year, regards to social distancing actions being soothed and borders restarting. “The retail sector withstood and has come through a very challenging time of unprecedented challenge, only commencing to acquire traction from the clearing of procedures from 2Q2022 along,” comments Ethan Hsu, Knight Frank Singapore’s head of retail.
In its 4Q2022 market statement, Knight Frank indicates that prime retail spaces in the Orchard Road area led the way in terms of rental progress, charting a rise of 3.1% y-o-y in 4Q2022 to $29.10 psf each month, adhered to by prime retail room in the Marina Centre, City Hall together with Bugis sub-market which signed up an expansion of 2.6% y-o-y to $23.90 psf each month. The increase in rentals was maintained by a boost in global traveler arrivals, along with the return of laborers came back to the office.
According to information assembled by Knight Frank Research, prime market rentals island-wide climbed 1.7% q-o-q in 4Q2022 to reach approximately $26.10 psf per month. This carries full-year prime retail leasing development to 2.6% for 2022.
Knight Frank’s Hsu is also predicting prime retail rentals to continue expanding this year, noting that the retail market is “in a better setting now”, even considering the rise in the Goods and Services Tax (GST) and also an extra soft economical overview. “As long as there are no measurements controls to gatherings and quarantine responsibilities for cross border arrivals, prime leas of retail room are most likely to grow in between 3% and also 5% for all of the of 2023, with the prime shopping belt Orchard Road leading the improvement,” he predicts.
The consultancy is forecasting prime first-storey retail rentals in Orchard along with Scotts Road to maintain its progression of in between 7% also 9% in 2023, while leas in other retail sub-markets are prepared for to grow in between 3% and 6%.
Edmund Tie’s record also mentions that in 3Q2022, islandwide net absorption for retail places clocked in at 323,000 sq ft, a four-fold rise from the 86,000 sq ft registered the preceding quarter, signalling reinforcing demand.
A different write up by Edmund Tie Research also feature data additionally indicating the conditioning of demand for retail industry spaces in the Orchard area. Based upon retail assets tracked by the consultancy, prime first-storey retail space on Orchard and also Scotts Road observed the toughest rental buildup of 7.4% for the whole of 2022 to $39.20 psf monthly. In the edge together with suburban areas, rentals grew by 6.7% in 2022 to $33.10 psf each month, while in other city locations, it expanded by 3.7% to $19.20 psf each month, based on Edmund Tie’s files.