F&B surge threatens Singapore’s retail stability, Knight Frank warns

Island-wide prime retail rents inched up just 0.3% QoQ in Q1 to $27.90 per square foot per month.

Singapore’s retail sector is heading into dangerous territory as unchecked growth in the food and beverage (F&B) industry threatens to undermine long-term stability, warns Knight Frank in its Q1 2025 Retail Report.

Without intervention, the real estate consultancy says the oversaturation of F&B outlets could erode profitability, waste resources, and destabilise the broader retail landscape.

A record 3,047 F&B businesses shut down in 2024 — the highest annual closures since 2005 — even as 3,793 new outlets opened, the second most in over three decades.

Knight Frank is urging policymakers to consider cooling measures similar to those used in the housing market. Proposed steps include capping the number of F&B licences within specific zones, limiting mall space allocated to food outlets, mandating minimum shop sizes, or imposing taxes on chains that grow too quickly, akin to the Additional Buyer’s Stamp Duty (ABSD) on residential properties.

Retail rents remain tepid, reflecting these market pressures. Island-wide prime retail rents inched up just 0.3% QoQ in Q1 2025 to $27.90 per square foot per month. Whilst Orchard Road showed a 2.7% increase, City Fringe rents slipped 0.3%. Knight Frank forecasts rent growth of just 1-3% this year, assuming no major disruptions.

The global outlook darkened recently after US President Donald Trump announced sweeping new tariffs, dampening business sentiment. For a trade-dependent economy like Singapore, this could further hinder consumer confidence and retail recovery.

Meanwhile, F&B brands continue to flood the market. With 22,747 licensed food establishments recorded in 2023 — the highest ever — and little regulation on expansion, the risk of oversupply is no longer theoretical.

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