What: Singapore's retail property market shows growing polarisation as prime locations maintain strength while overall vacancy rates rise to 6.8% amid new supply additions.

Why it is important: The market polarisation serves as an indicator of wider retail industry trends, where premium locations maintain resilience while secondary spaces face increasing pressure to reinvent themselves.

Singapore's retail property market is experiencing a significant divergence in performance across different locations. The islandwide retail vacancy rate has increased to 6.8% in the first quarter, up from 6.2% in the previous period, primarily due to the addition of 323,000sqft of new retail space. This expansion, including developments like Punggol Coast Mall and the revamped Cathay, has created absorption challenges in the market. However, prime locations, particularly along Orchard Road, continue to demonstrate resilience with healthy demand for lease renewals, especially from luxury retailers. The market's dynamics are further illustrated by the swift replacement of vacated prime spaces with new-to-Singapore retailers, such as Japanese thrift shop brand 2nd Street taking over former Pomelo premises in Somerset. Rental rates reflect this polarisation, with the Central and Fringe Areas experiencing declines while Orchard and Suburban Areas maintain stable rates at SG$23.2 and SG$14.7 per sqft respectively.

IADS Notes: Singapore's retail property market dynamics reflect broader transformational trends observed throughout 2024-2025. The current 6.8% vacancy rate increase aligns with the challenging environment noted in September 2024, where malls faced rising rents despite stagnant sales. However, successful adaptation strategies have emerged, as demonstrated by Raffles City's November 2024 revitalisation through new international brands and experiential retail concepts. This trend toward innovation continued with City Square Mall's April 2025 $50 million transformation, incorporating AI and sustainability initiatives to enhance customer engagement. The market's polarisation is further evidenced by Isetan's May 2025 strategic consolidation, reducing from six stores to two while maintaining its prime Orchard Road presence. This selective approach is supported by March 2025 data showing stronger performance in luxury and tourist-oriented locations compared to suburban areas, mirroring the article's findings about healthy demand for prime spaces despite overall vacancy increases.

Singapore retail vacancies rise despite steady demand for prime space