Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank

Singapore prime retail rents stayed largely flat in 1Q2025 amid a retail environment that continues to face rising operating costs and labour constraints, says Knight Frank Singapore. According to a research report published by the firm in April, prime retail rents in Orchard averaged at $31.20 psf per month (pm) last quarter, inching up just 0.4% q-o-q.

Prime retail spaces in the Marina Centre, City Hall and Bugis areas averaged at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents fell 0.3% q-o-q to $24 psf pm. Suburban prime retail rents averaged $26.80 psf pm, up 0.3% q-o-q.

The mostly stagnant rents follow mixed retail sales performance in 1Q2024. While data from the Singapore Department of Statistics showed retail sales excluding motor vehicles rebounding from a year-end slump 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. 

At the same time, the F&B scene has seen an accelerated pace of eateries setting up and closing, Knight Frank’s report highlights. In 1Q2025, F&B brands including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, while hotpot chain Haidilao closed two outlets.

Citing data from the Accounting and Corporate Regulatory Authority (Acra), Knight Frank observes that a total of 3,047 F&B businesses shut down in 2024 — the highest figure since 2005. On the other hand, 3,793 F&B businesses were formed the same year, the second-highest figure since 3,934 openings in 2021. 

The rapid entries and exits of F&B brands could point to a sign of overgrowth and the need for intervention to stabilise the market, says Knight Frank. “The dining scene appears to be reaching oversupplied levels, and measures to cool the market for a sustainable sector may be needed sooner rather than later,” says Ethan Hsu, head of retail at Knight Frank Singapore.

Potential measures include limiting the number of F&B licences issued within a certain location, capping the percentage of net lettable area allocated for F&B in a mall to a stakeholder-reviewed ratio, or imposing a tax on F&B chains that expand beyond a certain number of outlets within a designated period. “These can all serve as a call for F&B operators not to bite off more than they can chew and spread out the growth of F&B to a more reasonable and sustainable pace,” adds Hsu.

Given the persistent high-cost environment and the increasingly competitive F&B scene, the outlook for the retail remains challenging, says Knight Frank. In addition, sweeping tariffs announced by US President Donald Trump could drag down business sentiment. “For a small trading nation like Singapore, this might have far-reaching effects that could undermine [Knight Frank’s] delicate 1% to 3% growth forecast of prime retail rents in 2025,” says Hsu.