Prime retail rents on the road to recovery at last: Knight Frank
/ EdgeProp Singapore |
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.
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.
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