New fashion and lifestyle brands spur recovery in retail sector
New international retailers have been entering the Singapore retail market in the third quarter of 2023, boosting occupancy in retail spaces in prime locations in Orchard Road and other areas in the Central Region. According to Wong Xian Yang, the Cushman & Wakefield head of research for Singapore and Southeast Asia, while many of the new players are F&B operators, there have been a few new fashion and lifestyle outlets as well. Some of the newcomers have used Singapore as a base for their regional expansion plans.
July saw the opening of a Southeast Asian store by Chinese activewear brand Neiwai in Raffles City. Meanwhile, Finnish clothing label Marimekko made its debut in Ion Orchard in September. French patisserie Cedric Grolet also opened its first Asian outlet in Como Orchard in the same month. Swiss brand Clinique La Prairie partnered with RichL Group, a Singapore-based investment company, and opened a health boutique in Marina Bay Sands Hotel Tower 3.
F&B chains have been among the most popular choices for international first-timers, with international doughnut chain Mister Donut opening a store in Junction 8. Beverage brand Chaffic from Australia launched at Westgate, Taiwan fried ice-cream Frozen Heart chain opened an outlet at Jewel Changi, while the Philippines’ avocado dessert chain Avocadoria set up its first international franchise in Ang Mo Kio Hub.
According to Leonard Tay, the Knight Frank Singapore head of research, some local lifestyle brands have managed to generate go viral with their promotional campaigns, resulting in “viral bursts of sensational shopper interest and crowds”, with The Paper Bunny and Beyond The Vines serving as prime examples.
The Urban Redevelopment Authority’s retail rental index noted a 0.5% quarter-on-quarter improvement in the third quarter of 2023, followed by a 0.3% quarter-on-quarter growth in the second quarter of the same year, as per Tay. The occupancy levels increased from 92.5% in the previous quarter to 92.8%, surpassing the pre-pandemic level of 92.5%.
The Downtown Core saw net demand rise by 118,403 sq ft in the third quarter due to the completion of phase 1 of Guoco Midtown as well as The M at Beach Road, resulting in the vacancy rate dropping from 10.6% to 7.9%, the lowest seen since 4Q2019, as per Tricia Song, the CBRE head of research for Singapore and Southeast Asia.
Islandwide retail vacancy rates fell by 0.3 percentage points quarter-on-quarter to 7.2%, the second consecutive quarter of decline; this was mostly driven by a decrease of 0.4 percentage points in the Central Region to 8.8%, according to Angeline Phua, the JLL consulting director of research and consultancy in Singapore.
She also noted the growing pre-commitment rates of upcoming retail developments, such as One Holland Village and Pasir Ris Mall, as a sign of healthy demand for retail spaces.
In the Outside Central Region, the vacancy rate rose by 0.2 percentage points compared to the previous quarter to 4.2%, still staying in the 4.2% to 8.5% range over the five-year period before the pandemic.
The drop in vacancy rate and rising rents, however, are prompting retailers to consolidate their spaces in the third quarter due to increasing labour costs, competition and economic uncertainties.
Wong expects Singapore’s resilient consumption demand to further attract retailers and fill the vacant spaces as a result of some companies winding up. For landlords, rental expectations remain despite the rising operating costs.
The retail rental recovery in the Central Region should be rapid going forward, owing to limited new supply, low availability of prime retail spaces and the return of China’s outbound tourism. The latter regained its top source market spot for visitor arrivals in the third quarter, although still going 44% below the pre-pandemic level in 3Q2019.
Developed by UOL Group, this residential gem offers seamless connectivity to its surroundings and is the perfect place for a home. With a plethora of leisure, shopping, and dining options available, residents of Tampines Ave 11 Condo UOL Groupwill be spoilt for choice.
The Singapore Tourism Board estimates a range of 12 to 14 million visitor arrivals in 2023, with islandwide occupancy staying at low levels before the pandemic.
Shopper interest is expected to pick up with the return of major Mice events, as well as the increasing flight connectivity and capacity.