Weak Consumer Spending to Impact Singapore’s Retail Property Market
Singapore’s retail property market is expected to be dampened by weaker-than-expected consumer spending, according to Alan Cheong, executive director of research and consultancy at Savills Singapore. He notes that consumer spending in 2024 has been relatively weak, with the monthly retail sales index (excluding motor vehicles) and food and beverage sales index showing mostly negative year-on-year changes for most of this year.
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Cheong predicts that rents for retail properties in the prime Orchard Road submarket will see a modest 2% increase for the full year, falling short of initial expectations of a 3% to 5% climb. Meanwhile, suburban retail rents are expected to remain flat, in line with forecasts.
Research jointly published by DBS and Singapore Management University (SMU) found that consumer concerns over higher-than-expected inflation have mostly moderated in recent quarters, with Singaporeans’ headline inflation expectations remaining at 3.8% between June and September. This is attributed to the global economic slowdown, high interest rates and potential easing of supply chain disruptions.
The Singapore Department of Statistics’ retail sales data for October showed a 0.3% year-on-year increase (excluding motor vehicles), reversing a 1.5% decline recorded in September. Cheong points out that for the retail market to have a more positive outlook, consumer spending would need to keep pace with inflation, but the relatively low spending could pose challenges for businesses in the industry.
Despite a busy calendar of headline concerts, conferences and exhibitions in Singapore this year, retail spending and rental rates have not seen significant support. CBRE’s research, published late last month, notes that while concerts by international stars like Taylor Swift, Blackpink, Coldplay and Westlife attracted over 500,000 attendees, generating between $350 million and $450 million in tourism receipts, other MICE events did not have a comparable impact on retail activity.
Singapore also hosted leisure and business events such as the Formula One Grand Prix, the 25th World Congress of Dermatology, The Meetings Show Asia Pacific, NRF 2024, and ART SG. However, CBRE observed that business event attendees tend to stay at the event venue, and the F1 race did not significantly increase foot traffic in tourist-centric areas like Orchard Road.
Sulian Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore, notes that despite the limited support from events, Singapore’s premier status as a regional hub continues to attract noteworthy new-to-market brands. Some notable retail stores that opened this year include KSisters, The Pace, Brands for Less and Hoka, as well as new F&B concepts like Sushi Samba and coffee chains Blue Bottle, Grey Box and Puzzle Coffee. The emergence of new wellness concepts and restaurants offering entertainment is also enhancing the vibrancy of Singapore’s dining scene.
As a result, all prime shopping malls along Orchard Road maintained high occupancy rates this year, indicating strong confidence in the retail market. Tan-Wijaya notes that new retail brands, F&B concepts, and wellness experiences have supported demand for retail spaces and rental growth in central Singapore.
Looking ahead, retail landlords may have more flexibility to adjust rents as the supply of new retail spaces becomes limited. Cheong predicts that more retailers will optimize their real estate strategies, such as right-sizing spaces, establishing additional kiosks, or shifting operations to central kitchens. He also expects the entry of new-to-market F&B brands to continue in the first half of 2025, contributing to the growth of the retail market.