With growing economic headwinds and weak retail sales, islandwide Singapore retail-rental rates are projected to remain subdued, according to real estate company Edmund Tie. 

The company is projecting mixed fortunes across the city, ranging from a 2-per-cent decline to a 1-per-cent improvement this year. 

“However, the limited supply pipeline from next year onwards will provide some support to rents and occupancy,” the company said in its quarterly report Real Estate Times.

“In addition, the continued investment sales activity since early 2019 suggests investors’ confidence in the sector, although the landlords and retailers’ ability to transform and adapt to the changing retail landscape is increasingly becoming more important.”

Edmund Tie says the net absorption and supply rose of space rose significantly, largely underpinned by the opening of Jewel Changi Airport and Funan malls in the second quarter of this year, and PLQ Mall in the latest quarter.

“Nonetheless, given current geopolitical uncertainties, islandwide rental rates are projected to remain subdued and mixed,” the report concluded. 

Totalling more than 1 million sqft of retail space, these malls were more than 90-per-cent pre-leased before opening. Accordingly, occupancy rates increased by 1.1 percentage points quarter on quarter to 91.2 per cent.

However, Edmund Tie sounded a warning. 

“Despite the improved occupancy rates, the retail environment remains challenging with further closure and down-sizing of departmental stores and bookstores. Conversely, food & beverage appears to be ‘bucking the trend’ and continues to play an increasingly important component as part of a mall’s retail mix.”