Singapore’s Orchard Road Retail Rents Poised for Upward Momentum in 2024

The retail landscape in Singapore’s iconic Orchard Road is gearing up for positive growth this year, with rental rates forecasted to ascend by up to 5%, according to a recent report by Savills. In contrast, average rents in suburban areas are expected to maintain stability.

Savills’ report highlights the anticipated bolstering of Singapore’s tourism-related sectors, fueled by the ongoing recovery in air travel and tourism demand. Particularly, retail outlets and food and beverage establishments along Orchard Road and the Central Business District (CBD) are projected to reap the benefits. However, overall growth across various sectors is expected to moderate compared to previous years.

Despite the optimistic outlook, Savills cautions that Singapore’s tourism recovery may still fall short of pre-COVID levels in 2024. Factors such as geopolitical uncertainties and global economic fluctuations could potentially hinder travel sentiments and impede the pace of global travel recovery.

Furthermore, domestic retail and food and beverage sales may face challenges due to the allure of a strong Singapore dollar and high prices, prompting locals to opt for overseas spending. This shift in consumer behavior is likely to impact fringe and suburban retail establishments more significantly than those situated along Orchard Road and in the CBD.

While subdued domestic consumption may dampen occupier demand for retail space, rental rates are expected to remain resilient. Landlords are likely to adjust their rental expectations upwards to offset rising property operating costs, including increased wages for security personnel, maintenance crews, and administrative staff.

The anticipated recovery in tourist arrivals and spending is anticipated to bolster rents in tourist shopping districts, contributing to an estimated 3% to 5% year-on-year increase in average rents along Orchard Road in 2024. Conversely, average rents in suburban areas are anticipated to maintain stability, as cost-push inflation is counterbalanced by weakened domestic spending attributed to outbound travel and sluggish real wage growth.

In summary, while challenges persist in the retail sector, particularly in suburban areas, the outlook for Orchard Road remains optimistic, driven by the potential resurgence in tourism-related activities and robust rental demand.

Kiri Blakeley
Kiri Blakeley
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