In the latest Retail Report for Q3 2025, Knight Frank Singapore highlights the critical need for differentiation in the retail sector to survive in an increasingly competitive market. Ethan Hsu, Head of Retail at Knight Frank Singapore, emphasises that success depends on standing out from the mass of similar offerings.
The report reveals that the average gross rent for prime retail spaces saw a modest increase, with island-wide prime retail rent rising by 0.5% quarter-on-quarter to S$28.40 per square foot per month. This growth is attributed to the swift absorption of vacated units by well-capitalised occupiers, despite some retailers exiting the market due to challenging conditions.
Retail sales, excluding motor vehicles, reached S$7.2b in July and August 2025, surpassing the S$6.9b recorded in April and May. The retail sales index saw significant growth in recreational goods, furniture, and household equipment, partly due to government vouchers boosting discretionary spending.
Despite the rise of e-commerce, which stabilised at 12% to 15% of total retail sales post-pandemic, physical stores remain vital for luxury, lifestyle, and entertainment sectors. The report notes that international chains with deeper financial resources are entering the market, raising competition for local operators.
Cross-border shopping presents additional challenges, with Singaporeans spending over S$1b billion in Johor in the first eight months of 2025. This trend underscores the need for Singapore retailers to focus on unique offerings to retain shoppers.
Looking ahead, rental growth is expected to ease, with annual gains projected between 1% and 3%. Landlords are balancing leasing revenue with considerations like trade-mix and community character to support long-term viability.
