Singapore’s retail property market may face a slowdown as consumer spending continues to disappoint, according to Alan Cheong, executive director of research and consultancy at Savills Singapore. He notes that both the monthly retail sales index (excluding motor vehicles) and the food and beverage (F&B) sales index have shown negative year-on-year changes for most of this year.
As a result, Cheong anticipates a 2% increase in retail rents for prime Orchard Road properties by the end of the year, falling short of earlier expectations of a 3% to 5% growth. He also expects suburban retail rents to remain flat, in line with initial forecasts.
The joint research by DBS and Singapore Management University (SMU) reveals that consumer concerns over higher inflation have eased in recent months. However, inflation expectations among Singaporeans remained at 3.8% between June and September. The study, conducted by SMU’s Sim Kee Boon Institute for Financial Economics (SKBI), also found that most Singaporeans attribute this to the global economic slowdown, high interest rates, and potential easing of disruptions in the supply chain.
While tourist spending was boosted by headline concerts and major events, their impact on retail malls in tourist areas was mixed. Despite a packed schedule of events in Singapore this year, retail spending and rental rates did not reap significant benefits. According to CBRE’s research, the footfall generated by these events had varying effects on nearby malls.
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While Taylor Swift, Blackpink, Coldplay, and Westlife concerts drew over 500,000 attendees, with more than half of them being foreigners, other MICE events did not see the same impact on retail activity. Similarly, events like the Formula One Grand Prix and the 25th World Congress of Dermatology did not significantly boost foot traffic in tourist-centric areas like Orchard Road.
However, Sulian Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore, notes that Singapore’s status as a regional hub continues to attract new-to-market brands. “The wellness sector is also evolving with new concepts like Rekoop and Hideaway,” she says. New entertainment and restaurant concepts such as Centre of the Universe and Rasa have also opened in the CBD area.
This year, prime shopping malls along Orchard Road continued to enjoy high occupancy rates, and retail businesses have shown confidence in the retail market, according to Savills’ Cheong. “There is strong momentum in the entry of new-to-market F&B brands into Singapore, and this trend is expected to continue through at least the first half of 2025,” he says.
Looking ahead, Cheong anticipates that retail landlords may have more flexibility to increase rents next year, as the supply of new retail spaces becomes more limited. This gives them the opportunity to strategize and position their malls to remain relevant in the rapidly evolving consumption patterns of both locals and tourists.
Similarly, he also expects more retailers to optimize their real estate strategies, such as right-sizing their spaces, establishing additional kiosks, or closing under-performing branches. With the trend of new-to-market F&B brands entering Singapore expected to continue, there is strong momentum for the retail industry in the coming years.