Tourism recovery pushes Orchard Road retail rents up 2.3% y-o-y in 4Q2024: Savills
Rental development for shopping centers in the Orchard location is projected to get to the upper bound of the 1% to 2% range in 2025, while suburban rental development is anticipated to come in the lower end due to sluggish domestic spending, states Cheong.
Furthermore, vacancies for retail space in the Orchard Planning Area and the Rest of Central Area fell to a rock bottom in the last five to six years on the back of enhanced take-up and limited supply. “The higher demand in the Downtown Core and Orchard Planning Area might be steered by the arriving of new foreign labels as the tourism recovery reinforced sellers’ confidence,” considers the Savills’ statement.
Islandwide vacancy for retail areas continued to ease, dropping from 6.5% in 4Q2023 to 6.2% in 4Q2024– the most affordable in ten years.
Overall, retail rent throughout all regions documented positive net need in 2024, with the Downtown Core Planning Area surpassing the remainder. Net absorption for 2024 hit the top level in the last decade, at more than 1.2 million sq ft, up from the three-year historic annual standard of 958,000 sq ft.
Looking forward, tourist recovery is projected to continue in 2025 with 17 million to 18.5 million expected tourist arrivals adhering to a pipeline of leisure and Mice events, claims Alan Cheong, executive director of research and consultancy at Savills Singapore.
He thinks that increasing outgoing holiday in the year in the future might better dilute usage spend in Singapore, primarily in the suburban areas.
Union Square Residences Singapore
According to Savills Singapore, this is in line with URA’s rental index records, which monitored rental fees in the central area increasing at a faster rate of 1.0% y-o-y in 4Q2024. At the same time, leas in the edge area fell by 1.0% y-o-y for the very same duration.
Recovery in incoming travelers has actually steered demand for retail area in tourist locations, according to a statement by Savills Singapore. Leas of Orchard area shopping malls traced by the consultancy documented a 2.3% y-o-y surge last quarter, while suburb shopping centers declined slightly by 0.1% y-o-y around the very same period.
He adds: “Nevertheless, the general retail sales performance stays unpredictable as consumers move their spending patterns and practices. Paired with tight prime retail supply in the near term, sustained renting need in tourist locations and prime-facing locations are expected to proceed generating prime retail rents.”
