Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Prime retail areas in the Marina Centre, City Hall and Bugis areas averaged at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents dropped 0.3% q-o-q to $24 psf pm. Suburban prime retail rentals evened out $26.80 psf pm, up 0.3% q-o-q.
Simultaneously, the F&B scene has actually viewed an accelerated speed of restaurants setting up and closing, incorporates the Knight Frank report. In 1Q2025, F&B brands including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, while hotpot chain Haidilao closed two sites.
Singapore prime retail leas remained largely apartments in 1Q2025 amidst a retail setting that continues to encounter ascending operating costs and labour constraints, states Knight Frank Singapore. According to a research report released by the business in April, prime retail leas in Orchard equated at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
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Potential actions include limiting the amount of F&B licences issued within a particular place, capping the proportion of net lettable location allocated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax obligation on F&B chains that expand beyond a particular range of avenues within a designated period. “These can all serve as a call for F&B operators not to bite off more than they can eat and expand the development of F&B to a much more acceptable and lasting pace,” adds Hsu.
The fast entries and exits of F&B brands can point to an indicator of over growing and the need for intervention to stabilise the marketplace, claims Knight Frank. “The dining scene seems reaching oversupplied levels, and determines to cool down the market for a sustainable industry may be needed sooner as opposed to later,” states Ethan Hsu, head of retail at Knight Frank Singapore.
The largely stale leas comply with combined retail sales performance in 1Q2024. While information from the Singapore Department of Statistics presented retail sales omitting motor vehicles reviving from a year-end downturn to hit $4 billion in January on the back of Chinese New Year festivities, it ultimately fell to $3.2 billion in February prior to rising back up to $4.2 billion in March.
Given the relentless high-cost atmosphere and the increasingly affordable F&B scene, the outlook for the retail stays challenging, claims Knight Frank. Additionally, sweeping tariffs introduced by US Head of state Donald Trump could pull down business sentiment. “For a small trading nation like Singapore, this may have significant results that might undermine [Knight Frank’s] delicate 1% to 3% growth forecast of prime retail rents in 2025,” claims Hsu.
Pointing out data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notices that a total amount of 3,047 F&B businesses closed down in 2024– the top number ever since 2005. On the other hand, 3,793 F&B businesses were created the similar year, the second-highest figure ever since 3,934 openings in 2021.
