According to Savills Research, most of the upcoming supply of retail space (392,000 sq ft) for 2022 is expected to be completed in the second half of 2022. Shaw Plaza and Surbana Jurong Campus are the 2 major new projects contributing to this year’s supply.
A further 1.174 million square feet of retail inventory will be added by 2030, the largest project in the pipeline being the completion of Changi Airport Terminal 5, bringing in 435,000 sq ft of retail space. (Please refer to Table 1). Nevertheless, the average annual supply in the pipeline till 2025 is only about 524,000 sq ft, about half the 1.05 million sq ft recorded over the past 5 years (2016 – 2022).The next 3 years would offer convalescent time for the market to recover from the ill effects of the pandemic.
Retail sales have logged in double-digit retail sales growth in Q2 with increased spending observed across most product segments especially for fashion apparel, watches and jewellery.
As such, tenants who are more confident with the market recovery are willing to match up to landlords’ higher rental expectations. This raised Savills monthly prime rents in Orchard Area and Suburban Area by 0.4% QoQ to S$21.10 psf and 0.5% QoQ to S$23.00 psf respectively in Q2/2022.
Alan Cheong, Executive Director of Research at Savills Singapore adds, “Although retailer’s revenues are rising, so are their costs. At this juncture, the pass through from the cost side to selling prices and sales volume is only partial, resulting in thinning margins.”
Savills Research maintains the Q1 forecast for 3% YoY increase in Prime Orchard retail rents and 2% YoY increase for Prime Suburban rents in 2022, as in Q1.
Savills Research provides in-depth analysis of property market trends, forecasts from our professional research team and market commentary to help you make the right property decisions. Please find the Retail for Q2 2022 here, for your reference.