RETAIL SALES TO EXPERIENCE MODEST GAINS
Singapore retail trade sector contracted by 0.4% yoy in 2024, weighed down by more cautious spending amid high cost and global uncertainties. That said, prospects for 2025 could be supported by a tight labour market, easing inflation and gradually improving financial conditions. Retail sales are set to benefit from a sustained tourism recovery; January–February 2025 visitor arrivals reached 3.0 million (96% of the same period in 2019) and are on track to meet Singapore Tourism Board’s 17.0–18.5 million visitor forecast for 2025.
RENTAL INCREASE TO MODERATE AMID TENANT TURNOVER
Islandwide prime retail rents rose by 0.4% qoq to $29.90 psf/mo in Q1 2025, driven by limited quality supply and resilient demand from recovery of inbound tourism. Retail vacancy rates dropped to a decade-low of 6.2% by end-2024, with net demand reaching 1.3 msf, up from 0.8 msf in 2023. Prime retail rents in other city areas and Orchard rose 0.7% qoq and 0.5% qoq respectively in Q1 2025, driven by rising tourist levels and normalizing office crowds. While suburban rents grew 0.2% qoq, sustained by essential shopping from domestic catchments.
Going forward, overall retail rental growth may moderate as tenant attrition persists with higher operating costs, rising rents and shifts in consumer preferences. The recent wave of closures and downsizing among some longtime and anchor retailers suggests growing challenges, though top-tier malls are expected to be able to backfill their vacant space relatively quickly.
ORCHARD RETAIL UNDERPINNED BY LIMITED SUPPLY
While the suburban prime retail market has recovered faster from the pandemic, the Orchard prime retail market remains buoyed by tourism recovery and limited new supply. From 2025 to 2029, the Orchard market is expected to account for just 0.04 million sf (or 10%) of the islandwide annual new retail supply.
Orchard Road's allure as a premier retail destination was underscored in 2024, as retail net demand soared to a decade-high of 140,000 sf, fuelled by flagship store openings and the expansion of international and high-end retailers. Ongoing long-term rejuvenation plans and the redevelopment of older properties in Orchard are expected to further boost the area’s retail vibrancy, despite challenges from e-commerce and regional tourism competition.
