SINGAPORE: Edmund Tie experts say tourism recovery will fuel retail rental growth in Orchard this year. They said that rental rates for prime first-storey retail spaces in Orchard/Scotts Road could experience a significant upswing this year, with projections ranging from 3% to 5%, Singapore Business Review reports.
This surge is anticipated to be fuelled by the recovery of the tourism sector alongside a constrained supply chain, as per insights provided by property agency Edmund Tie.
While the rise in rents for prime ground-floor retail spaces across other city centre locales is expected, it’s anticipated to be more moderate, in the vicinity of 1% to 2%. Meanwhile, landlords in fringe and suburban regions may see rental growth of up to 3%.
Last year, islandwide net absorption in the retail sector tapered slightly, recording 805,000 sq ft compared to 990,000 sq ft in 2022. This dip was primarily due to a surge in demand in fringe and suburban areas, indicating a shifting preference among consumers.
Notably, the average retail occupancy rate in the Orchard/Scotts Road precinct saw a marginal uptick to 91% in 2023 from 90.2% the previous year.
Similarly, occupancy rates in the Other City Area also experienced a rise to 92.1%, while suburban retail occupancy saw a slight dip to 94.4%. This steady occupancy, particularly in prime areas like Orchard and Scotts Road, contributes to the ongoing stability and growth of rental rates, according to Edmund Tie.
“Brands grappling with market shifts and dynamics are facing closure, while new-to-market retailers are seizing opportunities to establish their presence,” Edmund Tie said.
The unexpected surge in visitor arrivals in December also played a crucial role in supporting occupancy and rental rates.
With 13.6 million visitors, December marked a turnaround from four consecutive months of decline./TISG
Read also: Singapore’s prime office and retail rents continue upwards trajectory
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