Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Prospective actions consist of limiting the number of F&B permits released within a specific area, capping the portion of net lettable location allocated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax on F&B chains that broaden beyond a particular number of avenues within a designated period. “These can all work as a call for F&B operators not to bite off greater than they can eat and spread out the development of F&B to an extra reasonable and sustainable pace,” adds Hsu.
Singapore prime retail leas stayed mainly flat in 1Q2025 amid a retail environment that remains to deal with ascending operating costs and labour restrictions, says Knight Frank Singapore. According to a research record published by the firm in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
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Mentioning data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notes that a total of 3,047 F&B businesses closed down in 2024– the biggest figure ever since 2005. On the other hand, 3,793 F&B businesses were formed the similar year, the second-highest number since 3,934 openings in 2021.
Given the persistent high-cost environment and the significantly affordable F&B scene, the outlook for the retail stays challenging, claims Knight Frank. In addition, sweeping tariffs announced by US Head of state Donald Trump could pull down business position. “For a small trading nation like Singapore, this could have far-ranging effects that might undermine [Knight Frank’s] delicate 1% to 3% development foresight of prime retail rental fees in 2025,” states Hsu.
At the same time, the F&B setting has observed an increased rate of dining establishments setting up and closing, incorporates the Knight Frank report. In 1Q2025, F&B brand names including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, while hotpot chain Haidilao closed 2 sites.
The mostly stagnant leas comply with blended retail sales performance in 1Q2024. While data from the Singapore Department of Statistics showed retail sales omitting car reviving from a year-end slump to hit $4 billion in January on the back of Chinese New Year celebrations, it consequently tumbled to $3.2 billion in February before moving back up to $4.2 billion in March.
The fast entries and exits of F&B brands could indicate a sign of over growing and the demand for intervention to secure the market, states Knight Frank. “The dining scene seems getting to oversupplied amounts, and measures to cool down the market for a sustainable market might be required earlier as opposed to later,” claims Ethan Hsu, head of retail at Knight Frank Singapore.
Prime retail areas in the Marina Centre, City Hall and Bugis areas averaged at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents decreased 0.3% q-o-q to $24 psf pm. Suburban prime retail rents evened out $26.80 psf pm, up 0.3% q-o-q.
