Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
Citing data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank notes that an overall 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 developed the same year, the second-highest figure since 3,934 starts in 2021.
The quick entries and exits of F&B brands might indicate an indicator of overgrowth and the demand for intervention to secure the marketplace, says Knight Frank. “The dining scene appears to be getting to oversupplied levels, and gauges to cool the marketplace for a sustainable field may be required earlier as opposed to later on,” states Ethan Hsu, head of retail at Knight Frank Singapore.
Simultaneously, the F&B setting has seen an increased pace of eateries establishing and closing, incorporates the Knight Frank report. In 1Q2025, F&B labels consisting of Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their shops, while hotpot chain Haidilao closed two sites.
Given the consistent high-cost environment and the considerably affordable F&B scene, the outlook for the retail continues to be difficult, claims Knight Frank. In addition, sweeping tariffs announced by US Head of state Donald Trump can drag down business position. “For a smaller trading state like Singapore, this could have far-ranging impacts that could undermine [Knight Frank’s] delicate 1% to 3% growth forecast of prime retail rents in 2025,” claims Hsu.
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The largely inactive leas comply with mixed retail sales productivity in 1Q2024. While data from the Singapore Department of Statistics presented retail sales omitting motor vehicles rebounding from a year-end downturn to hit $4 billion in January on the back of Chinese New Year festivities, it subsequently fell to $3.2 billion in February before climbing back up to $4.2 billion in March.
Prime retail spaces in the Marina Centre, City Hall and Bugis places equated at $26.40 psf pm in 1Q2025, up 0.6%, whilst city-fringe prime retail rents fell 0.3% q-o-q to $24 psf pm. Suburban prime retail rentals evened out $26.80 psf pm, up 0.3% q-o-q.
Possible actions consist of limiting the amount of F&B permits released within a certain location, capping the proportion of net lettable location designated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax obligation on F&B chains that increase beyond a specific range of outlets within a designated period. “These can all work as a call for F&B drivers not to bite off more than they can chew and expand the growth of F&B to a much more reasonable and sustainable pace,” adds Hsu.
Singapore prime retail rents remained greatly apartments in 1Q2025 amidst a retail environment that remains to deal with increasing operating costs and labour restraints, says Knight Frank Singapore. According to a research report posted by the company in April, prime retail rents in Orchard equated at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.
