Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The mostly stagnant rents adhere to combined retail sales performance in 1Q2024. Whilst information from the Singapore Department of Statistics presented retail sales excluding car reviving from a year-end downturn to strike $4 billion in January on the back of Chinese New Year festivities, it subsequently tumbled to $3.2 billion in February prior to climbing back up to $4.2 billion in March.
Prime retail areas in the Marina Centre, City Hall and Bugis areas averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents fell 0.3% q-o-q to $24 psf pm. Suburban prime retail leas evened out $26.80 psf pm, up 0.3% q-o-q.
Potential steps consist of restricting the number of F&B permits provided within a specific location, capping the portion of net lettable location allocated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax obligation on F&B chains that broaden beyond a particular number of avenues within a designated period. “These can all function as a call for F&B operators not to bite off more than they can chew and expand the growth of F&B to a much more reasonable and sustainable pace,” adds Hsu.
Given the consistent high-cost atmosphere and the considerably competitive F&B scene, the outlook for the retail remains difficult, says Knight Frank. Additionally, sweeping tariffs revealed by United States President Donald Trump can pull down business position. “For a small trading country like Singapore, this could have far-reaching impacts that can undermine [Knight Frank’s] delicate 1% to 3% progress projection of prime retail rental fees in 2025,” claims Hsu.
Singapore prime retail rentals stayed largely apartments in 1Q2025 amid a retail setting that remains to face increasing operating costs and labor restraints, says Knight Frank Singapore. According to a research report published by the business in April, prime retail rents in Orchard averaged at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
Pointing out data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank observes that an overall of 3,047 F&B businesses shut down in 2024– the top number ever since 2005. On the other hand, 3,793 F&B businesses were created the similar year, the second-highest figure ever since 3,934 openings in 2021.
The swift entries and exits of F&B brands can point to an indication of overgrowth and the need for intervention to secure the market, states Knight Frank. “The dining scene appears to be getting to oversupplied values, and gauges to cool the marketplace for a sustainable industry may be required sooner rather than later on,” says Ethan Hsu, head of retail at Knight Frank Singapore.
At the same time, the F&B scene has seen an accelerated speed of eateries setting up and shutting down, incorporates the Knight Frank information. In 1Q2025, F&B labels including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao closed two shops.
