Singapore’s retail sector is on a path to recovery, as more borders in Asia open up and the tourism sector steadily strengthens. According to a report by Knight Frank, average gross rent of prime retail spaces island-wide rose in 1Q2023 to $26.40 psf per month (psf pm), a growth of 1.2% q-o-q and 5% y-o-y.

The main driver for this growth comes from the influx of tourists to Singapore in 1Q2023 – 2.9 million visitors, although this falls short of pre-pandemic levels of 4.7 million. Nevertheless the average stay of visitors to Singapore increased from an average of 3.34 days in 2019 to 3.97 days.

Singapore’s prime Orchard Road shopping strip saw retail rents grow 1.4% q-o-q and 5.2% y-o-y, while the Marina Centre, City Hall and Bugis area experienced a q-o-q growth of 1.3% and 5.2% y-o-y respectively. Rents in suburban malls also saw an increase, rising 0.6% q-o-q to $26.20 psf pm, or 3.6% higher y-o-y.

JCUBE is closing its doors to make way for JCube Condo Residence, a 40-storey residential and commercial development, slated for completion in 2027. Potential launch of nearby JCube Residence residential homes, including JCube Condo Residence, promised to alleviate pent-up demand for housing in Jurong.

This uptick in rental rates comes despite a decrease in retail sales (excluding motor vehicles) in February, with a 18.7% m-o-m fall to $3.1 billion, which could reflect an end to “revenge spending” by consumers in the festive periods. Consumers have also become more conservative due to inflationary pressures affecting their non-discretionary spending.

However, the sector is showing encouraging signs of recovery. There is a continual interest from international luxury brands to open new stores in Singapore, and a range of new F&B outlets to keep people enjoying the experience.

Going forward, the retail sector in Singapore is expected to continue recovering as air travel and visitor arrivals reach pre-pandemic levels. According to STB’s estimates, between 12 and 14 million tourist arrivals are expected for 2023. Knight Frank’s Ethan Hsu predicts that prime retail rents are anticipated to register moderate gains of 3-5% in the same year, with headwinds such as inflation and GST increases likely to remain.