Prime retail rents to see further recovery in 2023, with Orchard Road leading the way
In its 4Q2022 market record, Knight Frank indicates that prime retail spaces in the Orchard Road location blazed a trail in regards to rental progress, charting a boost of 3.1% y-o-y in 4Q2022 to $29.10 psf monthly, followed by prime retail room in the Marina Centre, City Hall together with Bugis sub-market which signed up a growth of 2.6% y-o-y to $23.90 psf per month. The rise in leas was maintained by a rise in global visitors arrivals, in addition to the return of laborers came back to the workplace.
According to data put together by Knight Frank Research study, prime market leas island-wide climbed 1.7% q-o-q in 4Q2022 to reach an average of $26.10 psf each month. This carries full-year prime retail leasing growth to 2.6% for 2022.
The consultancy is anticipating prime first-storey retail rents in Orchard along with Scotts Roadway to maintain its progression of in between 7% and 9% in 2023, even though rents in another retail sub-markets are expected to develop between 3% and 6%.
Edmund Tie’s record even mentions that in 3Q2022, islandwide final absorption for retail places appeared at 323,000 sq ft, a four-fold increase from the 86,000 sq ft signed up the previous quarter, signalling strengthening necessity.
The improvement of the Singapore retail market got force in the latter half of last year, thanks to social distancing measures being calmed and borders restarting. “The retail field sustained and has actually withstood a very difficult time of unprecedented obstacle, only commencing to acquire grip from the clearing of actions from 2Q2022 ahead,” comments Ethan Hsu, Knight Frank Singapore’s head of retail industry.
Lam Chern Woon, head of research and consulting at Edmund Tie, anticipates a more vibrant year forward for the retail property market, helped by the proceeded recovery in the tourism sector. “With the bulk of the supply pipe slated to come onstream in 2023, consisting of The Woodleigh Mall, and retail outlets at One Holland Village, Guoco Midtown as well as IOI Central, the supply-demand characteristics are anticipated to be balanced this year,” he includes.
A separate write up by Edmund Tie Research also highlights data additionally pointing to the fortifying of need for retail industry spaces in the Orchard area. Based on retail possessions tracked by the consultancy, prime first-storey retail space on Orchard and Scotts Roadway viewed the greatest rental growth of 7.4% for the whole of 2022 to $39.20 psf each month. In the fringe and suburban areas, rents grew by 6.7% in 2022 to $33.10 psf each month, while in other city locations, it increased by 3.7% to $19.20 psf each month, based on Edmund Tie’s files.
Knight Frank’s Hsu is also forecasting prime retail leas to carry on growing this year, noting that the retail industry sector is “in a far better placement now”, even taking into consideration the boost in the Goods and Services Tax (GST) and a more low-key economical expectation. “As long as there are no measurements limits to events along with quarantine requirements for cross border arrivings, prime leas of retail area are most likely to expand between 3% and also 5% for the entire of 2023, with the prime purchasing belt Orchard Road leading the improvement,” he anticipates.