New fashion and lifestyle brands spur recovery in retail sector

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The Singapore retail market has been given a boost in the third quarter of 2023 with the entry of several international retailers. Predominantly in the food and beverage space, many fashion and lifestyle players have emerged, seeing the city-state as a platform for regional expansion. Cushman & Wakefield’s head of research for Singapore and Southeast Asia, Wong Xian Yang, commented on the situation: “Many new foreign brands, especially those in the F&B sector, have chosen to launch their first outlets outside the Central Region this year.”

The influx of new clubs in the market has also led to improvements in both occupancy and rental levels. Leonrd Tay, head of research for Knight Frank Singapore, noted that the URA rental index has been positive for two consecutive quarters, and occupancy levels returned to their pre-pandemic level of 92.5% in the third quarter, surpassing the 92.8% recorded in the previous quarter.

Tracking the trend of rising demand outside of the Downtown Core, Tricia Song, CBRE head of research for Singapore and Southeast Asia, remarked that the vacancy rate in the Downtown Core dropped from 10.6% in the second quarter to 7.9%, the lowest it has been since the 7.3% rate recorded in the fourth quarter of 2019.

On an island-wide level, the retail vacancy rate declined 0.3 percentage points quarter-on-quarter to 7.2%. Once again this was largely driven by the Central Region, which saw its rate fall 0.4 percentage points to 8.8%. Angeline Phua, consulting director of research and consultancy for JLL Singapore, attributed this largely to high occupier demand and net space withdrawal.

Looking to the future, retail rental recovery in the Central Region is expected to pick up due to low availability of prime retail spaces, limited new supply and an increase in outbound tourism from China. With Singapore Tourism Board’s projection of 12 to 14 million visitor arrivals for the year, it’s likely that these will contribute to improved consumption demand and greater demand for retail space.

However, challenges remain. CBRE’s Song noted that higher labour costs, increased competition for consumers, and dampened economic sentiment had resulted in some retailers consolidating their spaces. Wong further highlighted the issue of rental expectations from landlords, noting that these remain lofty in the current climate.

The ideal location of Tengah Executive Condominium makes it attractive to potential home buyers. It is close to the city center, the Jurong Innovation District and the Central Business District, and only a 30-minute drive away from Jurong Lake District. With its proximity to a nature reserve, it is also perfect for families with children. Buyers will be able to enjoy the convenience and comfort of living in a city close to nature with Tengah EC.

Nevertheless, both Wong and Tay remain optimistic that Singapore’s resilience in the face of the pandemic and its appeal for overseas retailers looking to break into a new market, will continue to attract new demand.

In conclusion, the Singapore retail market is showing signs of a recovery. An influx of international retailers, rising demand and visitor arrivals, as well as a low availability of prime retail spaces should all contribute to further growth in the years to come.