Singapore retail rents slip 0.4% in Q1 as vacancy rates creep up

Rents of retail space in Singapore’s central region dipped 0.4 per cent in the first quarter of 2024, extending a decline of 0.1 per cent seen in Q4 2023 as vacancy rates rose for stores outside prime locations.

Falling rents in the fringe areas of the central region dragged on the overall rental index, even though rents in the central area rose 0.2 per cent in Q1. Rents in the fringe areas fell 1.8 per cent, said Wong Xian Yang, Cushman & Wakefield’s head of research for Singapore and South-east Asia.

He said: “Within the central area, Orchard retail market continued to recover with the tourism boost. The iconic shopping belt has been driving brand expansions as retailers position themselves strategically to capture tourists’ footfall and spending.”

Islandwide, the Urban Revelopment Authority’s (URA) retail vacancy rate rose 0.2 percentage point in Q1 to 6.7 per cent, following three quarters of decline. This was led by higher vacancy rates in the Downtown Core, Rest of Central Area and fringe areas in the central region, and at suburban locations in the Outside Central Region, noted JLL’s consulting director of research and consultancy Angelia Phua.

Vacancy rate for the Orchard planning area was 6.8 per cent, while that of the central area outside Orchard was 8.5 per cent. The figure was 5.9 per cent for the rest of Singapore.

“Business closures in selected malls from underperforming retailers due to higher operational costs, keen competition, unpopular retail concepts and changing consumer preferences likely drove vacancy rates higher,” said Phua.