Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The largely inactive rents follow mixed retail sales productivity in 1Q2024. Whilst data from the Singapore Department of Statistics showed retail sales excluding car rebounding from a year-end downturn to hit $4 billion in January on the back of Chinese New Year celebrations, it consequently slipped to $3.2 billion in February prior to moving back up to $4.2 billion in March.
The rapid entries and exits of F&B brands could indicate a sign of overgrowth and the demand for intervention to stabilise the marketplace, claims Knight Frank. “The dining scene seems getting to oversupplied amounts, and gauges to cool down the market for a sustainable sector may be required sooner as opposed to later on,” states Ethan Hsu, head of retail at Knight Frank Singapore.
Potential steps include restricting the number of F&B permits issued within a particular area, capping the portion 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 increase past a certain number of outlets within a designated period. “These can all function as a call for F&B operators not to bite off greater than they can eat and spread out the growth of F&B to a more reasonable and lasting pace,” adds Hsu.
Mentioning data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notes that a total 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 number ever since 3,934 beginnings in 2021.
Singapore prime retail rents stayed largely condo in 1Q2025 amidst a retail setting that remains to deal with ascending operating costs and labour constraints, states Knight Frank Singapore. According to a research record posted by the business in April, prime retail rentals in Orchard equated at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
Given the persistent high-cost environment and the increasingly affordable F&B scene, the outlook for the retail stays difficult, states Knight Frank. Furthermore, sweeping tariffs revealed by US President Donald Trump might drag down business sentiment. “For a small trading country like Singapore, this could have significant impacts that might weaken [Knight Frank’s] delicate 1% to 3% development projection of prime retail rents in 2025,” states Hsu.
At the same time, the F&B scene has actually viewed a sped up pace of eateries establishing and closing, incorporates the Knight Frank statement. In 1Q2025, F&B labels including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, whilst hotpot chain Haidilao closed two shops.
Prime retail areas in the Marina Centre, City Hall and Bugis spots averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents dropped 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.
