Supply expected to taper off in 2026 & 2027 before increasing in 2028
Savills Q3 Retail Report highlights that the islandwide retail vacancy fell from 7.1% in Q2 to 6.9% in Q3 amid limited new supply. This was due to net demand of retail space in Orchard Road slightly improved boosted by increased visitors arrivals and take-up in the Downtown Core Planning Area and the demand in the Suburban Area remained steady.
The overall improvement in occupancy rate could be attributed to landlords being more flexible with their terms, especially for less prime spaces, as core tenants seek to terminate their leases early.
According to Savills’ estimates, the pipeline supply of retail space is expected to be around 540,000 sq ft (NLA) this year, compared to 679,000 sq ft (NLA) completed in 2024. The release of new supply is expected to taper off in the next two years before the completion of some major developments from 2028 onwards (such as the expansion of the Marina Bay Sands). With the limited pipeline supply in the next two years (less than 290,000 sq ft (NLA) per annum), it could relieve some pressure on retail occupancy and landlords lowering rents in the near term.
However, high operating costs and inconsistent spending patterns are likely to continue putting pressure on retailers, resulting in higher tenant turnover. While suburban malls are backed up by steady footfall and essential purchases, the rental growth is limited as many smaller operators are still grappling with cost pressures and competition from cross-border shopping.
Alongside the growing tourism numbers and affluent consumer base, Singapore is likely to remain as one of Asia’s top luxury shopping destinations, attracting more international retail brands to expand their footprint here. It ranks fifth among global alpha cities for new luxury retail store openings and sees international brands setting up recently.
Chinese jewellery label Laopu Gold opened one of its first boutiques outside China at MBS. Hong Kong-listed Chow Tai Fook Jewellery Group launched a new premium concept store at Jewel Changi Airport in October, targeting at both the local and tourist upscale market.
Swiss sportswear brand On opened its first South-east Asia flagship store in Jewel Changi Airport, spanning 9,300 sq ft across two levels. Meanwhile, the first Singapore store by Alo Yoga, the Los Angeles-born activewear and wellness brand, took up 3,030 sq ft at MBS.
American fast-food chain Chickfil-A will be opening its first Asian outlet at Bugis+ in December. South Korean hamburger chain Lotteria is set to open its first outlet in Singapore in February 2026, while Chipotle Mexican Grill is planning to open their first Asia store in Singapore next year.
Sulian Tan-Wijaya, Executive Director, Retail & Lifestyle, Savills Singapore, “The influx of overseas brands, in particular from China, continues. However, in the past few weeks, we noticed a little more push-back from them on rents in prime malls. This may be due in part to challenges and business conditions they are currently experiencing outside of Singapore, making them more cautious.”
Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore, “The effect of existing struggling businesses and new entrants could potentially be negated by each other, hence limiting the occupancy and rental growth to only the prime shopping belt. For 2025, we expect both Orchard Road and Suburban mall rents to rise by up to 2%.”
Read the full report here.