Tourism recovery pushes Orchard Road retail rents up 2.3% y-o-y in 4Q2024: Savills
According to Savills Singapore, this remains in line with URA’s rental index records, which monitored leas in the central area raising at a much faster level of 1.0% y-o-y in 4Q2024. At the same time, rents in the edge location dropped by 1.0% y-o-y for the same period.
Additionally, openings for retail sector in the Orchard Planning Area and the Rest of Central Area dropped to an all-time low in the last 5 to six 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 resurrection strengthened sellers’ confidence,” notes the Savills’ record.
Islandwide openings for retail areas continued to relieve, falling from 6.5% in 4Q2023 to 6.2% in 4Q2024– the lowest in one decade.
Looking forward, tourist recovery is assumed to proceed in 2025 with 17 million to 18.5 million expected vacationer arrivings adhering to a pipeline of recreation and Mice activities, states Alan Cheong, executive supervisor of research study and consultancy at Savills Singapore.
He adds: “However, the general retail sales performance stays unpredictable as clients shift their buying habits and practices. Combined with limited prime retail supply in the near term, sustained renting demand in tourist destinations and prime-facing places are anticipated to continue driving prime retail rents.”
Generally, retail rental throughout all areas reported favorable net interest in 2024, with the Downtown Core Planning Area outperforming the rest. Final absorption for 2024 hit the highest level in the last years, at greater than 1.2 million sq ft, up from the three-year historical annual average of 958,000 sq ft.
Recovery in incoming travelers has actually steered interest for retail place in tourist locations, according to a report by Savills Singapore. Rentals of Orchard location shopping malls tracked by the consultancy documented a 2.3% y-o-y surge last quarter, while suburb malls dropped somewhat by 0.1% y-o-y around the same period.
He believes that raising outgoing holiday in the year to come can further reduce usage spend in Singapore, especially in the suburbs.
Rental growth for shopping malls in the Orchard location is forecasted to reach the top bound of the 1% to 2% range in 2025, while suburban rental development is projected to come in the lower end due to sluggish residential costs, states Cheong.
