Singapore's prime retail rents stay flat in Q4 2019

Online platforms and slower sales dampened retail sales.

Rents of prime retail spaces stayed flat in Q4 2019 on the back of intensified competition amongst online platforms and slower sales, reports Knight Frank.

Further, the weaker economic outlook and the uncertain external environment further dampened Singapore consumers’ confidence, the report added. This is despite the fact that retailers were noted to have been drawn to prime spaces that offered better frontage and higher foot traffic.

Also read: Retail sales dipped 4% to $3.6b in November

Singapore remains enticing to travellers especially against a backdrop of geopolitical tensions in the region, adds Knight Frank. From January to November 2019, 17.4 million foreigners visited Singapore, up 2.9% YoY, lured by the political stability and safety as well as the strategies employed by the Singapore Tourism Board (STB).

Visitor arrivals from all major regions rose in the first eleven months of 2019, with Asian visitors continuing to constitute a significant proportion of visitor arrivals to Singapore. Meanwhile, American visitors rose at the fastest pace of 11.0% YoY, which Knight Frank said was due to the favourable exchange rates.

However, the rise of tourists failed to equate to higher spending. Tourism spending in the first half of 2019 declined 3% YoY, dragged by cheaper room rates. As a result, tourism spending in the accommodation sector fell 13% YoY.

Tourists also spent less on food and beverage, with tourism F&B spending dropping 5% YoY.

On the other hand, STB recorded a 2% YoY uptick in tourism receipts for shopping, though it remains to be seen whether the growth can be sustained in the next two quarters.

Also read: Travel ban from China may impact Orchard Road malls

China, Indonesia and India remained the biggest sources of tourism receipts albeit a decline in spending by Chinese visitors (down 5% YoY) and Indian visitors (down 12% YoY).

Singapore also remains as an ideal location for leisure and business travel, meetings, incentives, conferences, and exhibitions (BTMICE). In November, Singapore held the FinTech Festival x the Week of Innovation TeCHnology that attracted an estimated 57,000 participants from over 130 countries.

For 2020, retail rents are sighted to remain stable throughout 2020, with rents in the Central Region remaining flat barring shocks. Island-wide occupancy of retail spaces is also expected to remain stable in 2020, hovering between 90% and 98%.