Prime retail rents mostly flat in 1Q2025 as F&B scene shows signs of oversupply: Knight Frank
The swift entries and exits of F&B brands might indicate a sign of overgrowth and the need for intervention to secure the market, says Knight Frank. “The dining scene appears to be getting to oversupplied amounts, and gauges to cool the marketplace for a lasting industry may be required earlier instead of later on,” says Ethan Hsu, head of retail at Knight Frank Singapore.
Provided the relentless high-cost setting and the considerably affordable F&B scene, the outlook for the retail stays difficult, states Knight Frank. Additionally, sweeping tariffs announced by US President Donald Trump can pull down business view. “For a smaller trading state like Singapore, this could have far-ranging effects that could weaken [Knight Frank’s] delicate 1% to 3% growth forecast of prime retail leas in 2025,” states Hsu.
Mentioning information 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 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.
Simultaneously, the F&B situation has seen an increased rate of dining establishments establishing and shutting down, incorporates the Knight Frank information. In 1Q2025, F&B brands including Eggslut, Manhattan Fish Market, Prata Wala and Burge & Lobster shuttered their stores, while hotpot chain Haidilao shut 2 sites.
The commonly stagnant leas comply with mixed retail sales performance in 1Q2024. Whilst information from the Singapore Department of Statistics showed retail sales excluding motor vehicles reviving from a year-end downturn to hit $4 billion in January on the back of Chinese New Year events, it consequently tumbled to $3.2 billion in February before climbing back up to $4.2 billion in March.
Singapore prime retail rentals stayed largely condo in 1Q2025 amidst a retail setting that remains to face rising operating costs and labor restrictions, says Knight Frank Singapore. According to a research report released by the business in April, prime retail rentals in Orchard averaged at $31.20 psf per month (pm) past quarter, inching up just 0.4% q-o-q.
Prime retail areas in the Marina Centre, City Hall and Bugis places averaged at $26.40 psf pm in 1Q2025, up 0.6%, while city-fringe prime retail rents decreased 0.3% q-o-q to $24 psf pm. Suburban prime retail leas evened out $26.80 psf pm, up 0.3% q-o-q.
Potential actions consist of limiting the number of F&B licences released within a certain place, capping the percentage of net lettable location designated for F&B in a mall to a stakeholder-reviewed ratio, or enforcing a tax on F&B chains that increase beyond a particular number of shops within a designated period. “These can all act as a call for F&B operators not to bite off greater than they can chew and expand the development of F&B to an extra reasonable and sustainable pace,” includes Hsu.
