Photo of Tanglin Mall (Credit: Samuel Isaac Chua/The Edge Singapore)
SINGAPORE (EDGEPROP) - Prime retail rents across Singapore fell 1.1% q-o-q in 4Q2021, averaging at $25.40 psf per month, according to a research report by Knight Frank.
For the whole of 2021, prime retail rents fell 5.8% y-o-y. Ethan Hsu, head of retail at Knight Frank Singapore, notes that the rentals of prime spaces in suburban malls were most resilient throughout 2021, even though a decrease of 3.5% y-o-y was recorded.
“Prevailing work-from-home protocols, particularly when workers reverted to stringent workplace measures, supported the retail sector in heartland residential areas,” he explains. In comparison, prime retail rents in Orchard fell 6.9% y-o-y in 2021, while rents in the Marina Centre, City Hall and Bugis areas collectively fell 6.6% y-o-y.
Average gross rents of prime retail spaces in 4Q2021
Nonetheless, Hsu is sanguine on the outlook for prime retail rents for this year, as employees return to the workplace at an increased capacity of 50% starting from January. “Footfall within the CBD area as well as the prime Orchard Road shopping belt increased towards the tail-end of 2021, and this will provide more retailers with the confidence to grow and expand in 2022,” he says.
Supporting this are pandemic-driven factors that continue to benefit local retailers, including the lack of new-to-market foreign brands, heightened support for local brands, affordable retail spaces and a stable domestic supply chain.
In addition, he highlights, Singapore’s monthly retail sales index remained on an upward trend in 4Q2021, increasing by 10.9% and 3.9% y-o-y in October and November respectively.
As Singapore continues its transition towards living with Covid-19, Hsu believes that prime retail rents in suburban malls are already showing signs of bottoming out. He expects retail locations in Orchard and the CBD to follow suit as cross-border travel progressively increases throughout 2022.
“There is every chance that retail rents island-wide will turn positive in the process of rebound, growing between 2% and 4% for the whole of the year,” he says.