Tourism recovery pushes Orchard Road retail rents up 2.3% y-o-y in 4Q2024: Savills
Recovery in incoming travelers has actually generated demand for retail space in tourist areas, according to a statement by Savills Singapore. Rentals of Orchard area shopping centers tracked by the consultancy recorded a 2.3% y-o-y rise last quarter, while suburb shopping centers declined somewhat by 0.1% y-o-y around the same time frame.
According to Savills Singapore, this is in business with URA’s rental index records, that monitored rental fees in the major location growing at a much faster level of 1.0% y-o-y in 4Q2024. On the other hand, rental fees in the fringe area dropped by 1.0% y-o-y for the similar duration.
He thinks that boosting outgoing travel in the year to come can further reduce intake spend in Singapore, especially in the suburbs.
Overall, retail rent throughout all areas reported positive net interest in 2024, with the Downtown Core Planning Area exceeding the rest. Net absorption for 2024 reached the top level in the last years, at greater than 1.2 million sq ft, up from the three-year historic annual average of 958,000 sq ft.
Additionally, openings for retail space in the Orchard Planning Area and the Rest of Central Area fell to a rock bottom in the last 5 to 6 years on the back of enhanced take-up and tight supply. “The higher demand in the Downtown Core and Orchard Planning Area could be driven by the arrival of new international companies as the travel recovery bolstered sellers’ esteem,” considers the Savills’ record.
Islandwide openings for retail areas continued to ease, dropping from 6.5% in 4Q2023 to 6.2% in 4Q2024– the most affordable in one decade.
He adds: “Nonetheless, the overall retail sales performance stays uncertain as buyers shift their expenditures patterns and behaviours. Coupled with limited prime retail supply in the near term, sustained renting need in tourist destinations and prime-facing locations are expected to proceed generating prime retail rents.”
Looking forward, tourism resurrection is assumed to continue in 2025 with 17 million to 18.5 million anticipated tourist arrivals following a pipeline of recreation and Mice occasions, claims Alan Cheong, executive administrator of research and consultancy at Savills Singapore.
Rental growth for malls in the Orchard area is projected to reach the top bound of the 1% to 2% range in 2025, while suburban rental growth is projected to come in the lower end because of sluggish domestic spending, says Cheong.
