Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Prime retail areas in the Marina Centre, City Hall and Bugis spots averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents dipped 0.3% q-o-q to $24 psf pm. Suburban prime retail leas averaged $26.80 psf pm, up 0.3% q-o-q.
Singapore prime retail rentals remained largely apartments in 1Q2025 amidst a retail environment that remains to encounter rising operating expense and labour restraints, says Knight Frank Singapore. According to a research report released by the business in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
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Provided the consistent high-cost atmosphere and the increasingly affordable F&B scene, the outlook for the retail stays tough, states Knight Frank. In addition, sweeping tariffs revealed by United States Head of state Donald Trump might drag down business sentiment. “For a small trading state like Singapore, this could have far-ranging results that can weaken [Knight Frank’s] delicate 1% to 3% development projection of prime retail rents in 2025,” says Hsu.
Citing information from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notes that a total of 3,047 F&B businesses closed down in 2024– the biggest figure ever since 2005. On the other hand, 3,793 F&B businesses were formed the similar year, the second-highest number ever since 3,934 beginnings in 2021.
Together, the F&B setting has actually seen an increased rate of dining establishments setting up and shutting down, adds the Knight Frank information. In 1Q2025, F&B brands including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao closed two shops.
Prospective actions consist of restricting the number of F&B permits provided within a particular area, capping the percentage of net lettable location allocated for F&B in a mall to a stakeholder-reviewed ratio, or enforcing a tax on F&B chains that increase past a specific number of outlets within a designated period. “These can all work as a call for F&B operators not to bite off more than they can chew and spread out the growth of F&B to a more reasonable and sustainable pace,” adds Hsu.
The largely stagnant rents comply with blended retail sales performance in 1Q2024. While information from the Singapore Department of Statistics showed retail sales leaving out motor vehicles rebounding from a year-end downturn to strike $4 billion in January on the back of Chinese New Year events, it consequently tumbled to $3.2 billion in February prior to rising back up to $4.2 billion in March.
The quick entries and exits of F&B brands can indicate an indicator of over growing and the need for intervention to stabilise the market, states Knight Frank. “The dining scene seems reaching oversupplied amounts, and gauges to cool the marketplace for a lasting industry may be required earlier instead of later,” states Ethan Hsu, head of retail at Knight Frank Singapore.
