STEADY SALES DESPITE CAUTIOUS SPENDING
Singapore retail sales grew 2.2% as at May 2026 YTD, supported by a tight labour market and steady income growth, which continued to underpin household spending. However, cost-of-living pressures are expected to encourage more value-conscious consumer spending. While necessity-based retailers should remain relatively resilient, discretionary retailers may face pressure as cost-conscious consumers curb non-essential spending.
SUSTAINED DEMAND DRIVES RENTAL GROWTH
Prime rents in Orchard and suburban locations both rose 0.2% qoq in Q2 2026, bringing H1 2026 growth to 0.5%. Other city areas outperformed with 0.3% qoq growth, lifting H1 2026 gains to 1.0%, supported by a lower rental base and occupier demand for more cost-efficient locations amid limited prime space in Orchard.
Singapore continues to attract international retailers and first-time physical store entrants, underpinned by its affluent consumer base, recovering tourism and position as a regional business hub. Notable foreign debuts in H1 2026 included Molly Tea, Lotteria, Torikizoku and Subdued. F&B remained the key demand driver, accounting for 53% of prime mall openings in H1 2026, while Lifestyle and Fashion each contributed 16% and 14% of new openings respectively.
LIMITED SUPPLY UNDERPINS OUTLOOK
Prime retail rents are projected to grow by 1.0-2.0% yoy in Orchard and suburban locations, and 1.5-2.5% yoy in the Other City Areas in 2026. Prime retail assets are expected to remain supported by tight availability, underpinned by limited new supply. Retail completions islandwide are forecast to average just 0.4 msf annually through 2031, around half the historical average, with most new supply concentrated in suburban mixed-use developments. With limited new supply, landlords are expected to remain focused on asset enhancement initiatives to unlock value from existing assets. Recent and planned upgrades at City Square Mall, West Mall, Hougang Mall, NEX and Plaza Singapura underscore efforts to reconfigure space and elevate the shopper experience. The retail market remains a two-tier market, and these initiatives are expected to strengthen the competitive positioning of top-tier assets characterised by strong connectivity and curated tenant mixes, further widening market bifurcation.
