Singapore Orchard Road rents to rise by up to 6% this year

Meanwhile, suburban retail rents could grow by up to 2%. 

As the tourism sector continues recovering, Savills said in a report that the services sector in Singapore’s Central Area should benefit from more business from overseas visitors in 2H/2023. 

The coming Formula 1 race and the festive season in Q4 will likely see an even greater influx of foreign visitors. 

Here’s more from Savills:

Businesses which are more reliant on the local customer base could continue to see slower sales as more of them are expected to travel. This is very likely the case during this year-end holiday season and school holidays. The list of recent closures of brands such as Crate & Barrel, UFC Gym, Haus Athletics and Fenix Fitness, have been those targeted at the local market. Going forward, it might be more challenging for some retailers if people continue to travel more and spend less domestically. 

Nonetheless, demand for retail space, especially for prime units with a stable footfall and good accessibility, is likely to hold up amid limited new supply in the near term. Retail space at tourist destinations and major shopping belts, such as Orchard Road and Marina Bay Sands, is expected to benefit from the return of tourism. 

Rents are expected to see sustained growth in view of the tourism rebound and a low base from last year. With that, rents in Orchard Road are forecast to rise up to 6% YoY in 2023, while in the Suburban Area they are likely to increase up to 2% YoY. 

However, the recovery could be uneven as challenges abound and overall growth may ease next year with the slow global economy beginning to impact domestic spending and also visitor arrivals. Challenges such as rising operating costs and a labour crunch will also put further pressure on retailers, reigning in their ability to accede to higher asking rents.