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Retail H1 2022 – Poised for a better year

Singapore retail sector on firmer path to recovery.


SINGAPORE, MAY 9 2022 - Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) has today released its Retail H1 2022 report, a publication that interprets the latest half-yearly trends and provides the retail market outlook for the year ahead. 

Recovery of Singapore’s retail sector on firmer ground
Improving consumer and business confidence translated into a broad-based recovery in rents. Based on Colliers’ basket of retail malls, prime rents in both Suburban and Orchard locations edged up by 0.7% and 0.4% QOQ in Q1 2022 respectively, compared with 0.5% and 0.1% in Q4 2021.
Figure 1: Retail rents in Q1 2022

2022 H1 Retail report_retail rents in q1 2022

 

Dickson Koh, Associate Director, Research, commented: “With footfall recovering strongly in the Orchard shopping belt and the CBD, as well as shopper traffic in the suburban areas remaining resilient, this clearly indicates that brick and mortar is still relevant, even as online shopping gains traction. In-store experiences if crafted properly can maximise personalisation and connect the customer with the brand and allow them to validate products in real life. By providing a seamless flow across different channels, retailers will be able to drive conversion from online browsing to physical purchase, building trust and loyalty with customers along the way.”

Retail outlook bolstered by sustained economic growth and return of tourist spending

In the coming quarters, consumer footfall and tenant sales are likely to increase with the lifting of travel curbs and safe management measures (e.g., no limits on group sizes and employees returning to the office), and a resumption of live performances and the reopening of nightlife businesses. This augurs well for retail operators, especially those located in the Downtown Core and Orchard.

As such, retailers are likely to be more confident in their expansion plans, lending support to leasing demand. Consequently, the tightening of vacancy rates amid limited new supply should support a gradual recovery in retail rents from H2 2022 onwards, although the pace of improvement could be tempered by persistent inflationary pressures and manpower shortages.

Retail saw healthy investment activity

Retail investment activity picked up significantly in Q1 2022, after a drought of transactions above SGD 10 million in Q4 2021. Some notable transactions include the collective sale of Tanglin Shopping Centre in Orchard, and the changing hands of suburban Wisteria Mall.

As such, there was a slight uptick of 0.1% QOQ in the average capital values of prime retail assets tracked by Colliers in Q1 2022, while net property yields remained relatively stable over the same time period. Nevertheless, prime retail capital values could see further growth going forward, on the back of renewed investment interest in these assets.

 

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Media Contact:

Shane Chua