Knight Frank Singapore’s latest Retail Report for Q2 2025 highlights the challenges faced by the retail sector amidst rising costs and a saturated market. Despite a dip in international visitor arrivals to 2.8 million in April and May from 3 million in the first two months of the year, the Singapore Tourism Board remains optimistic about achieving its full-year target of 17 to 18.5 million arrivals.
Prime retail rents in Singapore have seen moderate growth, with island-wide rents increasing by 1.2% quarter-on-quarter to S$28.20 per square foot per month. The Marina Centre, City Hall, and Bugis micromarket experienced the highest growth at 1.9%, reaching S$26.90 per square foot per month. Ethan Hsu, Head of Retail at Knight Frank Singapore, emphasised the importance of placemaking in the face of rising costs and shrinking margins, stating, “In an increasingly saturated F&B market, rising costs and shrinking margins underscore the need for sustained placemaking efforts to ensure retail spaces offer unique identities and experiences.”
Retail sales, excluding motor vehicles, rose from S$3.3b in April to S$3.6b in May, with department stores and apparel categories showing strong performance. However, the F&B sector faces significant challenges, with operating costs reaching a record S$12.3b in 2023, an 8.8% increase from the previous year.
Looking ahead, the retail outlook remains challenging due to global uncertainties and rising operating costs. Retailers are expected to adopt cautious expansion strategies as they navigate these turbulent times.
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