Orchard Road is expected to see improved growth levels. Image: Canva.
  • The first four months alone have seen over 4 million visitors
  • Year on year international arrivals growth recorded at nearly 650%
  • A possible technical recession may change the scene

Rents for Orchard Road malls in Singapore have seen growth rates revised up, with suburban malls seeing growth rates revised down.

The overall drivers of change in the Little Red Dot’s retail market include a strong rebound in tourism and a reduction in working from home.

Orchard Road bears fruit

The year on year (YoY) growth of international visitor arrivals was up 646.3%, with the first four months of this year seeing 4.04 million overseas visitors alone.

The rental forecast for the area was revised up to a range of 2% to 3%, from the previous range of 1% to 2%, Savills Executive Director of Research and Consultancy, Alan Cheong, noting, “With the strong rebound in tourism, Orchard Road rents are expected to rise more than those in the suburbs.”

Savills’ monthly prime rents in the Orchard area saw a larger increase of 1.5% quarter on quarter (QoQ) to S$21.80 per square foot (psf) in Q1 2023 compared to the 0.9% increase in Q4 2022.

Suburban malls settle to equilibrium

While the iconic shopping strip saw monthly prime rents rise, the story was different for retail locations further out.

Savills’ monthly prime rents of retail malls in the Suburban Area remained unchanged at S$23.30 psf. It had previously risen for four consecutive quarters.

Prime retail rents from 2012 to Q1 2023

Source: Savills Research and Consultancy.

While Orchard Road is expected to benefit from the elevated level of tourism, Savills noted that suburban malls, “will continue to dance to the vicissitudes of the
economy,” as fewer choose to work from home and the market settles into a post pandemic equilibrium.

A revolving door of staying power

Singapore’s retail market can expect a state of flux over the next twelve months, with Savills predicting in its latest retail briefing a possible tip into a technical recession this year.

This follows the pandemic, inflation, and a slowing economy, with Savills noting:

“Shopping complexes are seeing a revolving door phenomenon regarding the staying power of their tenants.”

Savills Retail Briefing June 2023

This could be a feature of the market for the next 12 months as the market finds its feet as the sea of change continues to toss and turn.

“A Darwinian environment is setting in on the retail scene with large retail and F&B establishments experimenting with concepts to pick the next winners,” added Cheong.

Brand names return as Singapore hub status reaffirmed

Retailers are displaying confidence in the Singaporean market as leasing picks up.

Spanish furniture manufacturer Kave Home is one of the new brands entering Singapore, opening a flagship store at Raffles City Shopping Centre.

Hong Kong’s beauty chain Sasa is also planning a comeback with one or two stores, underscoring the enduring appeal of the Singapore market.

“Notwithstanding headwinds brought about by the economic slowdown and inflation, Singapore is increasingly re-capturing its status as a regional retail hub,” said Savills Executive Director of Retail and Lifestyle, Sulian Tan-Widjaya.

“While established retail brands like H&M and Zara go through a consolidation process, newer entrants are actively increasing their footprint in Singapore.”

With the retail sector’s resilience, the upward trajectory of tourist arrivals, and the entry of new international brands, Singapore’s retail industry is positioned for growth and
continued recovery.

Temple Street shophouse hits the market

Another shophouse has hit the market in as many months, with the segment remaining a popular choice.

Located next to Sri Mariamman Temple, 22 Temple Street is located along an Instagram-famous stretch of road that looks directly towards an often-photographed facade of the People’s Park Complex.

Featuring a distinctive historical façade, 22 Temple Street sits on a freehold land of
approximately 1,276 square feet and has a floor area of approximately 3,423 square feet.

Zoned “Commercial”, the 3-storey shophouse is currently 100% occupied, with a pawn shop occupying both the first and second floors, while the third floor is tenanted to a digital marketing company.

Located in the heart of Chinatown, 22 Temple Street holds a special place within the
enclave’s rich heritage, which was once a district for Singapore’s Chinese immigrant
population. The neighbourhood is renowned for its harmonious blend of old-world charm and contemporary vibrancy, with century-old temples, traditional medicinal halls, and historic shophouses coexisting alongside trendy lifestyle shops and bustling new bars.

Image: Supplied.

“The shophouse ownership along Temple Street is very tightly held given many shophouse owners use the premises to operate their businesses. Many of the shophouses along Temple Street have private leases carved out and as such they have very short lease balance left,” said Savills Executive Director of Investment Sales and Capital Markets, Yap Hui Yee.

Savills also noted that, as the shophouse is fully zoned for commercial use under the Urban Redevelopment Authority’s (URA) Master Plan 2019, foreigners and companies are eligible to purchase the shophouse and there will be no Additional Buyer Stamp Duty (ABSD) or Seller’s Stamp Duty (SSD) payable.

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