Retail property market in Singapore expected to be dampened by weaker consumer spending in 2024.
According to Alan Cheong, executive director of research and consultancy at Savills Singapore, consumer spending in 2024 has been relatively weak. The monthly retail sales index (excluding motor vehicles) and food and beverage (F&B) sales index have mostly shown negative changes this year.
Cheong predicts a 2% increase in rents for retail properties in the prime Orchard Road submarket by the end of the year, falling short of earlier expectations of a 3% to 5% increase. The suburban retail rents are expected to remain flat, in line with initial forecasts.
Research by DBS and Singapore Management University (SMU) shows that consumer concerns over inflation have moderated. However, the research found that most consumers attribute this to factors such as the global economic slowdown, high interest rates, and potential easing of supply chain disruptions.
Recent data from the Singapore Department of Statistics reveal a 0.3% year-on-year increase in retail sales (excluding motor vehicles) in October, reversing a decline in September.
Cheong notes that consumer spending keeping pace with inflation would be a more positive outcome for the retail market. However, with relatively low spending, this may pose financial challenges to businesses in the industry.
Despite a packed calendar of events in Singapore this year, retail spending and rental rates have seen limited support. While concerts by international stars like Taylor Swift and Coldplay have attracted a significant number of foreign attendees, other events such as business conferences have not had a strong impact on retail activity.
Notable new-to-market brands that have opened in Singapore this year include KSisters, The Pace, Brands for Less, and Hoka. The wellness sector is also evolving with concepts like Rekoop and Hideaway. Many new F&B concepts have also been introduced, including Sushi Samba and various coffee chains.
Savills’ Tan-Wijaya notes the emergence of new wellness concepts and entertainment-driven restaurants which are expected to enhance the vibrancy of Singapore’s dining scene.
Looking ahead, retail landlords may have more flexibility to adjust rents positively as the supply of new retail spaces becomes limited. Cheong also expects more retailers to optimize their real estate strategies by right-sizing their spaces, closing under-performing branches, or shifting cooking operations to central kitchens. The trend of new-to-market F&B brands entering Singapore is expected to continue for the first half of 2025.