Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Singapore prime retail rents stayed mainly apartments in 1Q2025 amid a retail setting that continues to encounter rising operating expense and labour constraints, claims Knight Frank Singapore. According to a research report released by the firm in April, prime retail leas in Orchard equated at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
The commonly stagnant rents adhere to mixed retail sales performance in 1Q2024. While data from the Singapore Department of Statistics presented retail sales excluding car reviving from a year-end slump to strike $4 billion in January on the back of Chinese New Year festivities, it subsequently slipped to $3.2 billion in February before rising back up to $4.2 billion in March.
Given the relentless high-cost atmosphere and the considerably competitive F&B scene, the outlook for the retail continues to be difficult, says Knight Frank. On top of that, sweeping tariffs revealed by United States President Donald Trump can drag down business position. “For a smaller trading country like Singapore, this might have significant impacts that could weaken [Knight Frank’s] delicate 1% to 3% growth foresight of prime retail rental fees in 2025,” claims Hsu.
Prospective measures consist of restricting the amount of F&B licences issued within a certain area, capping the proportion of net lettable area allocated for F&B in a mall to a stakeholder-reviewed proportion, or imposing a tax on F&B chains that broaden past a certain range of shops within a designated period. “These can all work as a call for F&B drivers not to bite off more than they can chew and expand the development of F&B to a much more acceptable and lasting pace,” includes Hsu.
Prime retail areas in the Marina Centre, City Hall and Bugis areas equated at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents decreased 0.3% q-o-q to $24 psf pm. Suburban prime retail leas evened out $26.80 psf pm, up 0.3% q-o-q.
Together, the F&B setting has observed an accelerated speed of eateries setting up and closing, adds in the Knight Frank statement. In 1Q2025, F&B brand names consisting of Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, whilst hotpot chain Haidilao shut two shops.
Mentioning data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that a total amount of 3,047 F&B businesses shut down in 2024– the highest number since 2005. On the other hand, 3,793 F&B businesses were formed the same year, the second-highest figure since 3,934 beginnings in 2021.
The swift entries and exits of F&B brands could point to an indication of overgrowth and the need for intervention to secure the marketplace, says Knight Frank. “The dining scene appears to be reaching oversupplied levels, and gauges to cool the market for a sustainable sector might be required earlier as opposed to later,” says Ethan Hsu, head of retail at Knight Frank Singapore.
