Recovering tourist arrivals to push up prime retail rents: Knight Frank

Prime rents in Orchard Road have already risen by 5.8% to S$29.5 psf pm in Q2.

Prime retail rents are expected to rise between 3% to 5% in 2023, driven by continuous recovery in the retail sector thanks to improvement of travel and visitor arrivals, reports Knight Frank.

The Singapore Tourism Board (STB) projects between 12 million to 14 million arrivals in 2023, edging closer to the 19.12 million visitors reported in 2019 or during the pre-pandemic period.

“More borders in Asia have reopened and Singapore welcomed visitors from previously closed countries,” said Ethan Hsu, head, retail, Knight Frank Singapore. He noted that Singapore welcomed 2.9 million visitors in Q1 2023 alone. “Although about only two-thirds the pre-pandemic 4.7 million arrivals in Q1 2019, the average duration of visitor stays lengthened from an average of 3.34 days in 2019 to 3.97 days.”

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“The steadily increasing number of visitor arrivals have and continue to boost recovery in the retail sector, especially for the prime shopping strip at Orchard Road as well as in the Central Area,” he added.

As a result gross rents in prime spaces island-wide averaged a 1.2% quarter-on-quarter increase and a 5% rise in Q2, at S$26.40 psf pm. This was in part due to prime rents in Orchard rising 5.8% to S$29.5 psf pm during the period.

Prime retail rents in the Marina Centre, City Hall and Bugis micro market, as well as the City Fringe also grew by more than 4% to S$24.2 psf pm, and S$22.6 psf pm, respectively. 

Rents in suburban malls, meanwhile, remained firm with an average rent of S$26.2 psf pm.