Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The commonly stale leas comply with combined retail sales productivity in 1Q2024. Whilst information from the Singapore Department of Statistics presented retail sales excluding motor vehicles rebounding from a year-end slump to strike $4 billion in January on the back of Chinese New Year festivities, it ultimately slipped to $3.2 billion in February prior to climbing back up to $4.2 billion in March.
Offered the persistent high-cost environment and the significantly affordable F&B scene, the outlook for the retail stays difficult, says Knight Frank. In addition, sweeping tariffs introduced by United States Head of state Donald Trump could pull down business view. “For a small trading nation like Singapore, this might have far-reaching effects that might undermine [Knight Frank’s] delicate 1% to 3% development foresight of prime retail rental fees in 2025,” states Hsu.
Possible actions include limiting the amount of F&B permits released within a particular area, capping the portion of net lettable location allocated for F&B in a mall to a stakeholder-reviewed proportion, or enforcing a tax obligation on F&B chains that broaden past a certain number of outlets within a designated period. “These can all work as a call for F&B operators not to bite off more than they can chew and spread out the growth of F&B to a much more reasonable and lasting pace,” includes Hsu.
Citing data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notes that a total amount of 3,047 F&B businesses closed down in 2024– the top figure since 2005. On the other hand, 3,793 F&B businesses were created the same year, the second-highest figure ever since 3,934 starts in 2021.
The fast entries and exits of F&B brands can indicate an indication of overgrowth and the demand for intervention to secure the marketplace, claims Knight Frank. “The dining scene seems reaching oversupplied values, and measures to cool down the market for a lasting market may be required earlier instead of later on,” claims Ethan Hsu, head of retail at Knight Frank Singapore.
Prime retail spaces 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 fell 0.3% q-o-q to $24 psf pm. Suburban prime retail rentals averaged $26.80 psf pm, up 0.3% q-o-q.
Together, the F&B setting has viewed an increased rate of restaurants establishing and closing, adds the Knight Frank statement. In 1Q2025, F&B labels consisting of Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, whilst hotpot chain Haidilao shut two outlets.
Singapore prime retail rentals remained mostly flat in 1Q2025 amid a retail environment that continues to encounter rising operating costs and labor restraints, states Knight Frank Singapore. According to a research report posted by the firm in April, prime retail leas in Orchard equated at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
