Tourism recovery pushes Orchard Road retail rents up 2.3% y-o-y in 4Q2024: Savills
According to Savills Singapore, this remains in line with URA’s rental index records, which observed rents in the main location increasing at a faster level of 1.0% y-o-y in 4Q2024. At the same time, rents in the fringe area dropped by 1.0% y-o-y for the similar duration.
Islandwide vacancy for retail places continued to reduce, dropping from 6.5% in 4Q2023 to 6.2% in 4Q2024– the lowest in 10 years.
Looking ahead, tourist resurrection is assumed to carry on in 2025 with 17 million to 18.5 million expected tourist arrivings adhering to a pipeline of recreation and Mice activities, states Alan Cheong, executive director of research and consultancy at Savills Singapore.
Generally, retail rental throughout all areas documented positive net need in 2024, with the Downtown Core Planning Area outperforming the remainder. Final absorption for 2024 hit the top level in the last years, at more than 1.2 million sq ft, up from the three-year historic yearly standard of 958,000 sq ft.
In addition, openings for retail area in the Orchard Planning Area and the Rest of Central Area dropped to a rock bottom in the last five to 6 years on the back of improved take-up and limited supply. “The greater need in the Downtown Core and Orchard Planning Area could be driven by the arriving of brand-new international companies as the travel resurrection reinforced sellers’ esteem,” considers the Savills’ report.
He adds in: “Nevertheless, the general retail sales efficiency continues to be unclear as customers move their spending patterns and behaviors. Coupled with limited prime retail supply in the near term, sustained leasing need in tourist destinations and prime-facing locations are expected to proceed driving prime retail rentals.”
Recovery in inbound tourists has actually driven interest for retail space in tourist areas, according to a report by Savills Singapore. Rents of Orchard area shopping malls traced by the consultancy reported a 2.3% y-o-y surge last quarter, whilst suburb shopping malls dropped somewhat by 0.1% y-o-y throughout the same period.
He believes that boosting outbound trip in the year ahead might better thin down usage spend in Singapore, mainly in the suburbs.
Rental growth for malls in the Orchard area is predicted to get to the top bound of the 1% to 2% range in 2025, while suburban rental growth is projected to come in the lower end due to sluggish domestic investing, says Cheong.
