_Retail Market Update Q3 2022

Key Highlights

• A general uplift in retail rents - Building on the removal of mobility restrictions in the previous quarter, prime rents of retail space remained on an upward trend in Q3 2022 across all regions in Singapore.
• The average island-wide gross rental increased 1.5% q-o-q to S$25.60 psf pm, as retail spending continued to be driven by employees returning to the workplace and the burgeoning inflow of tourists.
• Retail sales rose by 17.5% to a combined S$6.8 billion in July and August 2022 when compared to the same period a year ago. Not counting February 2022, monthly retail sales since November 2021 were above the average sales level of about S$3.2 billion reported throughout pre-pandemic 2019.
• As Singapore normalises and adjusts to life after the pandemic, the retail market continues to evolve, with the pace of change accelerating each month. Department stores have lost their dominance in malls giving way to more diverse themed lifestyle stores catering to a broad range of households.
• Brands such as Daiso, Don Don Donki, Decathlon as well as Muji, are notable examples that are quickly establishing pre-eminence in malls with the ability to attract a wide spectrum of consumers. Demand for such stores will drive expansion plans of these key players in Singapore over the next few years.
• Key events such as the 11.11 Sale, Black Friday, Christmas, as well as New Year’s Eve will boost and support retail spending in the final lap of the year. Stable and healthy growth in tourist arrivals and Singapore seemingly able to return to pre-COVID normalcy point to sustainable recovery for the retail market, and prime retail rents are on course to grow by the earlier projection of 2% to 4% for the whole of 2022.
• In order to take advantage of the nascent recovery that has built up from April 2022, retailers should continue to seek value enhancements and improve user platforms in order to differentiate their consumer offerings in the wake of external volatilities as well as a new wave of local COVID-19 infections that could unhinge the delicate balance of the current state of recovery.