Fall in prime retail rents eases in 1Q2021: Knight Frank

SINGAPORE (EDGEPROP) - Prime retail rents in Singapore contracted by 12.9% y-o-y in 1Q2021 to an average of $26.60 psf per month, as the pick-up in retail activity remained uneven and limited due to restrictive dining capacities, says Knight Frank.

However, the decline of average gross rents of prime retail space in Singapore generally slowed down, with the exception of prime retail shops on Orchard Road, due to the continued lack of tourists impeding a substantial rebound in retail activity.

The research consultancy projects that footfall at retail stores, particularly those in the CBD, is set to rise, as regulations on workplace capacity have been relaxed to accommodate up to 75% of the workforce from April 5 onwards. However, this is projected to be at a “moderate pace”, as a majority of firms continue to implement flexible work arrangements.

With a total of $2.8 billion in sales (excluding motor vehicles) in February 2021, the retail sales index grew by 8.2% y-o-y to 87.5, marking an uptick from the decline of 8.5% in January 2021.

The proportion of online sales (excluding motor vehicles) normalised from the peak levels of 16.3% and 13.4% in November and September 2020, to 12.0% and 11.7% in January and February 2021 respectively, but remained higher than the proportion of online sales before the onset of the “circuit breaker” in April last year, highlights Knight Frank.

Of that, the majority of the online retail trade comprised transactions of computer & telecommunications, furniture & household equipment, and supermarkets & hypermarkets.

Knight Frank has also observed that more brands have hopped on the e-commerce bandwagon, noting that a “holistic brand experience that can drive customer behaviour” has become essential.

Upcoming retail players to look out for include Ace Signature, a new supermarket specialising in international produce at NTP+, a mall at New Tech Park set to open some time this year. Furniture retailer Courts’ new flagship store at The Heeren is also slated to open in 2022, integrating new retail concepts.

Looking ahead, Knight Frank suggests that malls should not just focus on providing customers with an immersive experience through technology, but also consider placemaking strategies to entice shoppers into the malls by providing them with what they cannot access online. “Such efforts must focus on bringing people together, allowing them to create memorable moments in malls,” it says.

“To achieve these, landlords should provide certain concessions or incentives to like-minded retailers whose objectives are aligned; as well as offer hybrid rent structures comprising reasonable base rents with a turnover rent component,” Knight Frank says.