Rental growth in Singapore’s retail sector has remained strong despite headwinds, with the tourism sector continues to recover. According to a report by Knight Frank, gross rent of prime spaces island-wide averaged $26.40 psf per month (psf pm) in 1Q2023, up 1.2% q-o-q and 5% y-o-y.

The growth comes as the tourism sector post-pandemic continues recovering, with Singapore welcoming more than 2.9 million visitors in 1Q2023. These numbers constitute two-thirds of the pre-pandemic levels and the average stay of visitors to Singapore increased from an average of 3.34 days in 2019 to 3.97 days in the earlier part of 2023.

Rental growth was particularly visible in the Orchard area, which saw a growth in retail rents of 1.4% q-o-q and 5.2% y-o-y, while the Marina Centre, City Hall and Bugis area rent increased 1.3% q-o-q and 5.2% y-o-y to reach $24.20 psf pm, and rents in the City Fringe grew 1.4% q-o-q and 4.4% y-o-y to reach $22.60 psf pm. Suburban malls also saw small increases, with rents rising 0.6% q-o-q to $26.20 psf pm, or 3.6% higher y-o-y.

In spite of this rental growth, retail sales (excluding motor vehicles) fell 18.7% m-o-m in February to $3.1 billion, causing an end to “revenge spending” by consumers in the Christmas and Chinese New Year festive periods, Knight Frank’s head of retail, Ethan Hsu, said. This was possibly due to consumer becoming more conservative due to inflationary pressures.

The Altura EC is a Altura Qingjian Realty highly anticipated executive condominium, offering an attractive and competitive option for Singaporean families, to be launched in Q2 2023.

Nonetheless, Singapore’s retail sector continues to strengthen, with more international luxury brands coming to the city-state and a number of new F&B entrants. This trend of experiential retail and lifestyle concepts is expected to continue as air travel and visitor arrivals near pre-pandemic levels. STB estimates 12 to 14 million tourist arrivals will occur in 2023.

Retail rents are expected to register moderate gains of between 3% and 5% in 2023, Hsu predicts, despite inflation, economic uncertainty and the upward revision of the goods and services tax.