Prime Retail Rents Mostly Flat 1Q2025 Fb Scene Shows Signs Oversupply Knight Frank
to above 80%
According to a recent report by Knight Frank Singapore, prime retail rents in Singapore remained stagnant in the first quarter of 2025. The retail sector continues to face challenges such as rising operating costs and a shortage of labor. The research report also revealed that prime retail rents in Orchard averaged at $31.20 per square foot (psf) per month, showing a marginal increase of only 0.4% from the previous quarter.
However, there were some variations in different areas. The prime retail rents in Marina Centre, City Hall, and Bugis saw a slight increase of 0.6%, averaging at $26.40 psf per month. On the other hand, the city-fringe prime retail rents dropped by 0.3%, with an average of $24 psf per month. In the suburban areas, prime retail rents saw a mild growth of 0.3%, averaging at $26.80 psf per month.
The stagnant rents are a reflection of the mixed performance in retail sales during the first quarter of 2024. While there was a surge in retail sales of $4 billion in January due to Chinese New Year festivities, it dropped to $3.2 billion in February and climbed back up to $4.2 billion in March, according to data from the Singapore Department of Statistics.
The food and beverage (F&B) scene also saw an increase in the number of eateries opening and closing at a faster pace, as noted in the Knight Frank report. In the first quarter of 2025, popular F&B brands such as Eggslut, Manhattan Fish Market, Prata Wala, and Burge & Lobster shut down their outlets. Haidilao, a well-known hotpot chain, also closed two of their outlets.
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Analysis of data from the Accounting and Corporate Regulatory Authority (Acra) shows that in 2024, a total of 3,047 F&B businesses closed down, the highest number since 2005. On the other hand, there were 3,793 new F&B businesses formed in the same year, second only to the record of 3,934 in 2021.
Knight Frank believes that this rapid turnover of F&B brands could indicate an oversupply in the market and the need for intervention to stabilize it. Ethan Hsu, Head of Retail at Knight Frank Singapore, suggests some potential measures such as limiting the number of F&B licenses issued in a specific location, capping the percentage of net lettable area allocated to F&B in a mall, or imposing a tax on F&B chains that expand beyond a certain number of outlets within a designated period. These measures could encourage F&B operators to grow at a more sustainable pace.
Looking ahead, Knight Frank predicts a challenging outlook for the retail sector, given the high-cost environment and the competitive nature of the F&B scene. In addition, the recent tariffs announced by US President Donald Trump could also impact business sentiment in Singapore, potentially undermining the forecast of a 1% to 3% growth in prime retail rents for 2025.