Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Singapore prime retail rentals remained mostly flat in 1Q2025 amid a retail environment that remains to face ascending operating costs and labor restrictions, states Knight Frank Singapore. According to a research record published by the company in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
Possible actions consist of limiting the amount of F&B permits released within a specific area, capping the percentage of net lettable location allocated for F&B in a mall to a stakeholder-reviewed proportion, or enforcing a tax obligation on F&B chains that expand past a certain range of shops within a designated period. “These can all act as a call for F&B operators not to bite off more than they can chew and expand the development of F&B to an extra acceptable and sustainable pace,” adds Hsu.
The fast entries and exits of F&B brands could point to a sign of overgrowth and the need for intervention to stabilise the market, says Knight Frank. “The dining scene appears to be getting to oversupplied amounts, and determines to cool the market for a lasting field might be needed sooner rather than later on,” claims Ethan Hsu, head of retail at Knight Frank Singapore.
Prime retail spaces in the Marina Centre, City Hall and Bugis spots equated 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 rents averaged $26.80 psf pm, up 0.3% q-o-q.
Together, the F&B setting has seen an increased rate of dining establishments establishing and shutting down, adds the Knight Frank statement. In 1Q2025, F&B brands including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, whilst hotpot chain Haidilao closed two outlets.
Given the relentless high-cost atmosphere and the significantly affordable F&B scene, the outlook for the retail remains challenging, says Knight Frank. Furthermore, sweeping tariffs introduced by United States President Donald Trump might drag down business view. “For a smaller trading nation like Singapore, this may have far-reaching impacts that can weaken [Knight Frank’s] delicate 1% to 3% development projection of prime retail rental fees in 2025,” states Hsu.
Citing information from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notes that a total amount of 3,047 F&B businesses closed down in 2024– the highest number ever since 2005. On the other hand, 3,793 F&B businesses were developed the similar year, the second-highest number ever since 3,934 starts in 2021.
The largely stagnant leas comply with blended retail sales productivity in 1Q2024. Whilst information from the Singapore Department of Statistics showed retail sales leaving out motor vehicles rebounding from a year-end depression to strike $4 billion in January on the back of Chinese New Year celebrations, it consequently tumbled to $3.2 billion in February prior to climbing back up to $4.2 billion in March.
