Singapore’s retail landscape is seeing a positive shift as the islandwide retail vacancy rate decreased from 7.1% in the second quarter (Q2) to 6.9% in the third quarter (Q3) of this year, according to Savills’ latest report. This decline is attributed to a slight improvement in net demand for retail space, particularly in Orchard Road and the Downtown Core Planning Area, alongside steady demand in suburban areas.
The report highlights that landlords have become more flexible with lease terms, especially for less prime spaces, as core tenants seek early lease terminations. This flexibility has contributed to the improved occupancy rates. Savills estimates that the pipeline supply of retail space will be around 540,000 square feet this year, a decrease from 679,000 square feet completed in 2024. The supply is expected to taper off in 2026 and 2027, with major developments anticipated from 2028 onwards, such as the expansion of Marina Bay Sands.
Despite these positive trends, high operating costs and inconsistent spending patterns continue to challenge retailers, leading to higher tenant turnover. Suburban malls, supported by steady footfall and essential purchases, face limited rental growth due to cost pressures and competition from cross-border shopping.
Singapore remains a top luxury shopping destination in Asia, attracting international brands. Recent openings include Chinese jewellery label Laopu Gold at Marina Bay Sands and Swiss sportswear brand On at Jewel Changi Airport. American fast-food chain Chick-fil-A is set to open its first Asian outlet in December, with other international brands planning to follow suit.
Sulian Tan-Wijaya of Savills Singapore noted, “The influx of overseas brands, particularly from China, continues, although there is some push-back on rents in prime malls.” Alan Cheong, also from Savills, added, “We expect Orchard Road and suburban mall rents to rise by up to 2% in 2025.”
