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Tourism rebound to fuel retail rental growth in Orchard this year: expert

Rents to rise by up to 5% in Orchard, 2% to 3% in fringe, suburban locations.

Rents of prime first-storey retail space in the Orchard/Scotts Road area could grow by 3% to 5% this year on the back of a strong recovery in the tourism sector and a limited supply pipeline, according to Edmund Tie.

The property agency projected rents for prime ground-floor retail space in other parts of the city centre to increase in 2024, albeit at a softer pace of 1% to 2%, while retail landlords in the fringe and suburban areas could expect an up to 3% rental growth.

It said islandwide net absorption moderated to 805,000 sq ft last year from 990,000 sq ft in 2022 driven by the huge demand in fringe and suburban areas. 

The average retail occupancy in the Orchard/Scotts Road area inched up to 91% in 2023 from 90.2% the year before, supporting a 0.4% quarterly uptick in prime first-storey rents in the fourth quarter.

Occupancy in the Other City Area also rose to 92.1% while suburban retail occupancy dipped by a tad to 94.4% last year.

READ MORE: Retail space prices up 1.2% in 2023

“High occupancy in Orchard and Scotts Road, as well as the Fringe and Suburban micro-markets continue to support rents,” Edmund Tie said. “Brands grappling with market shifts and dynamics are facing closure, while new-to-market retailers are seizing opportunities to establish their presence.”

Helping occupancy and rents to stay elevated last year was the surprise surge in visitor arrivals in December which snapped four consecutive months of decline with 13.6 million visitors.

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