The retail vacancy rate in Singapore increased to 6.8% in the first quarter of 2025, up from 6.2% in the previous quarter, according to Savills Research. This rise is attributed to new retail spaces, such as Punggol Coast Mall and the revamped The Cathay, taking time to be absorbed into the market. Net demand fell by 129,000 square feet as occupied space decreased across most areas after five consecutive quarters of positive net take-up.
Savills anticipates a steady pipeline supply of retail space this year, with around 597,000 square feet of Net Lettable Area (NLA) expected, slightly down from the 679,000 square feet completed in 2024. A significant increase in supply is projected for 2028, with major projects like the Marina Bay Sands expansion set to be completed. This will result in an average annual supply of 659,000 square feet NLA from 2025 to 2029, higher than the historical average of 445,000 square feet per year from 2020 to 2024.
Despite the overall demand softening, prime malls along Orchard Road have seen healthy lease renewal momentum, particularly from luxury retailers. Alan Cheong, Executive Director of Research & Consultancy at Savills Singapore, noted that whilst prime spaces are quickly occupied, the rate of closures could soon surpass new openings. He stated, “Orchard rents are likely to hit the upper end of our 1% to 2% growth forecast in 2025.”
The retail sector faces challenges from rising costs and a tight labour market, with the Urban Redevelopment Authority’s rental index showing a 0.5% quarter-on-quarter decline in the Central Region. However, the meetings, incentives, conventions, and exhibitions (MICE) segment is expected to drive growth, with plans to triple MICE receipts by 2040, potentially boosting retail spending in key precincts.
