Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The largely stagnant rents adhere to combined retail sales productivity in 1Q2024. While information from the Singapore Department of Statistics presented retail sales omitting motor vehicles rebounding from a year-end depression to hit $4 billion in January on the back of Chinese New Year events, it consequently tumbled to $3.2 billion in February before rising back up to $4.2 billion in March.
The rapid entries and exits of F&B brands could point to a sign of overgrowth and the need for intervention to stabilise the marketplace, states Knight Frank. “The dining scene appears to be getting to oversupplied values, and gauges to cool down the marketplace for a lasting market may be required earlier as opposed to later on,” says Ethan Hsu, head of retail at Knight Frank Singapore.
Singapore prime retail rentals remained mostly condo in 1Q2025 amid a retail setting that remains to deal with rising operating costs and labor constraints, claims Knight Frank Singapore. According to a research report released by the firm in April, prime retail rents in Orchard equated at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
Prime retail areas in the Marina Centre, City Hall and Bugis places equated at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents decreased 0.3% q-o-q to $24 psf pm. Suburban prime retail leas averaged $26.80 psf pm, up 0.3% q-o-q.
Pointing out data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that an overall of 3,047 F&B businesses shut down in 2024– the biggest number ever since 2005. On the other hand, 3,793 F&B businesses were formed the similar year, the second-highest figure since 3,934 starts in 2021.
Given the persistent high-cost environment and the considerably affordable F&B scene, the outlook for the retail remains challenging, says Knight Frank. In addition, sweeping tariffs introduced by United States Head of state Donald Trump could pull down business view. “For a small trading country like Singapore, this might have far-reaching results that could weaken [Knight Frank’s] delicate 1% to 3% development projection of prime retail leas in 2025,” claims Hsu.
Together, the F&B setting has actually viewed an accelerated speed of restaurants setting up and closing, adds the Knight Frank information. In 1Q2025, F&B labels including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, whilst hotpot chain Haidilao closed 2 sites.
Prospective measures consist of restricting the amount of F&B licences provided within a certain place, capping the percentage of net lettable area designated for F&B in a mall to a stakeholder-reviewed proportion, or imposing a tax obligation on F&B chains that broaden past a specific range of avenues within a designated period. “These can all act as a call for F&B drivers not to bite off more than they can chew and spread out the development of F&B to an extra reasonable and sustainable pace,” adds Hsu.
