The URA statistics showed that the retail property market in Singapore succumbed slightly under the pressure of persisting macroeconomic headwinds, specifically, inflationary pressures and an elevated interest rate environment.
According to JLL, in 1Q24, vacancy rates rose slightly, despite resilient occupier demand in the broader retail market and moderated supply conditions. URA’s islandwide vacancy rate rose 0.2 percentage point q-o-q to 6.7% in 1Q24, following three straight quarters of decline.
This was led by higher vacancy rates in the
Downtown Core, Rest of Central Area and Fringe areas in the Central Region, and
Outside Central Region.
Here’s more from JLL:
We observed strategic expansion in the broader retail market in diverse trades, primarily food and beverage operations, fashion apparel brands, entertainment establishments, active lifestyle/sports-related operations and beauty and wellness establishments.
However, business closures in selected malls from underperforming retailers due to higher operational costs, keen competition, unpopular retail concepts and changing consumer preferences likely drove vacancy rates higher.
In 1Q24, retail fashion brand Zara ceased its operation at Marina Square while Times Bookstores closed its branches at Plaza Singapura and Waterway Point due to declining sales and low foot traffic in stores. On a positive note, The Travel Store now occupies the retail space at Plaza Singapura previously occupied by Times Bookstores.
Additionally, Emart24, a South Korean convenience store chain, closed all three outlets in Singapore, including those at malls, namely Jurong Point and NEX. Tom & Stefanie, a children’s fashion retailer, closed its outlet at West Mall, which had been in operation for 25 years.
Retail rents declined in 1Q24 on the back of rising vacancy rates. URA’s retail rental index in the Central Region fell 0.4% q-o-q in 1Q24 for the second consecutive quarter, extending the 0.1% q-o-q dip in 4Q23. The uncertain economic outlook, which led landlords to compromise on rents to prioritise occupancy rates, likely led to the decline in rents in 1Q24.
On a positive note, retail asset prices continued to rise, despite falling retail rents. The URA price index in the Central Region rose 1.8% q-o-q in 1Q24, marking the fourth consecutive quarter of an increase. Source: Real Estate Asia
