Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Provided the persistent high-cost environment and the increasingly competitive F&B scene, the outlook for the retail stays difficult, says Knight Frank. Furthermore, sweeping tariffs announced by United States President Donald Trump could drag down business sentiment. “For a small trading nation like Singapore, this could have far-ranging effects that might weaken [Knight Frank’s] delicate 1% to 3% development forecast of prime retail rents in 2025,” states Hsu.
At the same time, the F&B situation has actually seen a sped up pace of dining establishments establishing and closing, incorporates the Knight Frank information. In 1Q2025, F&B brand names including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, whilst hotpot chain Haidilao closed two sites.
The quick entries and exits of F&B brands can point to an indication of over growing and the demand for intervention to stabilise the market, states Knight Frank. “The dining scene seems reaching oversupplied values, and gauges to cool down the market for a lasting sector might be required sooner as opposed to later on,” says Ethan Hsu, head of retail at Knight Frank Singapore.
The largely stagnant leas adhere to combined retail sales performance in 1Q2024. While information from the Singapore Department of Statistics presented retail sales excluding motor vehicles rebounding from a year-end slump to hit $4 billion in January on the back of Chinese New Year events, it subsequently tumbled to $3.2 billion in February before moving back up to $4.2 billion in March.
Singapore prime retail rentals remained mainly flat in 1Q2025 amidst a retail setting that remains to face increasing operating expense and labour constraints, says Knight Frank Singapore. According to a research report released by the firm in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
Mentioning data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank observes that a total of 3,047 F&B businesses shut down in 2024– the highest figure ever since 2005. On the other hand, 3,793 F&B businesses were created the similar year, the second-highest number since 3,934 beginnings in 2021.
Prospective measures consist of restricting the number of F&B licences provided within a specific area, capping the portion of net lettable location designated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax on F&B chains that increase past a specific number of avenues within a designated period. “These can all work as a call for F&B drivers not to bite off more than they can chew and spread out the growth of F&B to a more fair and lasting pace,” includes Hsu.
Prime retail spaces in the Marina Centre, City Hall and Bugis areas equated at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents fell 0.3% q-o-q to $24 psf pm. Suburban prime retail rents evened out $26.80 psf pm, up 0.3% q-o-q.
