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Retail leasing market in Singapore remains steady but headwinds remain

Ravi Philemon

CBRE’s Asia Pacific Retails Trends said that the retail leasing market in Singapore remains steady, but restrictions on hiring foreign labour are set to weigh on sentiment in the coming quarters.

Besides its analysis of the Singapore retail leasing market, the report also looked at the China, Hong Kong, Japan, Korea, India and Australia markets.

The report summarises the trends of retail leasing market as such:

  • Asia Pacific retail leasing markets were quiet in Q1 2019 as most retailers adopted a cautious approach to expansion amid downcast sales performance.

  • Demand was led by cosmetics and personal care tenants, which are increasingly sought after by shopping mall landlords due to their strong sales and ability to attract high footfall. F&B expansion remained steady, led by cafes, dessert outlets and casual dining establishments.

  • Weaker consumption is expected to inhibit leasing activity over the course of 2019. Economic headwinds will force a rethink of operating strategy, with retailers expected to slow their pace of expansion and focus more on enhancing the overall shopping experience.

  • Shopping centres and department stores will undergo renovations or repositioning exercises, such as introducing new store formats and experience-based offerings.

retail leasing market
retail leasing market

Image credit: NLB – The retail leasing market’s rate of expansion has slowed in recent months said the CBRE report.

Sporting goods retailers and gyms remained key drivers of leasing demand in Singapore said the report. Even with this trend, the retail leasing market’s rate of expansion has slowed in recent months said the CBRE report. Entertainment retailers such as children’s indoor activity park are displaying strong demand for large spaces in shopping malls, the report added.

F&B is reaching saturation in the retail leasing market said the report.

But nevertheless Q1 saw selected groups experimenting with new formats said the report. These include an online provider which opened a central kitchen for F&B retailers to reach a new catchment area. Cosmetic brands, led by Korean and western names, continue to utilise pop-up stores for new product launches. As for luxury retailers, their leasing demand was limited, but there were no cases of downsizing or store closures. The report warned that retailer sentiment, especially among labour intensive trades, will turn cautious in the coming quarters.

It added that new pipeline supply remains limited beyond this year in the retail leasing market.

The report noted that following trends in Singapore’s retail leasing market:

  • New restrictions on the hiring of foreign workers will negatively impact leasing demand from leabout intensive segments such as F&B.

  • The Strategic Development Incentive Scheme may prompt the renovation of older retail properties in the Orchard area.

  • On online grocery retailer received special dispensation to open a supermarket and F&B store in a warehouse this quarter.

The report presented the following selected leasing transactions:


Size (SQ FT GTA)



Decathlon Singapore Lab








Don Don Donki


City Square Mall


SK-II Boutique Spa by Senze Salus


Raffles City


Source: CBRE Research

CBRE had earlier commented on the Q1 statistics released by the Urban Redevelopment Authority (URA) and said, the data suggests a plateauing of the retail property market.

Mr Desmond Sim, CBRE’s Head of Research for Southeast Asia, said: “On the back of the introduction of new supply, vacancy rates have risen from 9.6% in Q4 2018 to 9.9% in Q1 2019. Orchard Road and Outside Central Region submarkets have seen higher vacancy rates of 6.1% and 11.1%, respectively, this quarter.”

He added: “Looking ahead, with the physical occupation of recent completions, the likes of Jewel Changi Airport and the AEI of TripleOne Somerset, being taken into account, we expect the vacancy rate to compress.”

CBRE believes that in addition, the supply pipeline om the retail property market is expected to tighten over the next few years, which will further equalise the demand and supply balance.

The retail property market continues to be a two-tier market with resilience in the prime spaces while secondary spaces and floors remain challenging, noted CBRE. It added that landlords for such secondary spaces would have to strike a fine balance between occupancy and rental values.

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