Prime Retail Rents Orchard Road Rise 41 2023 Eighth Highest Globally Savills
In 2023, Savills published a report on the global luxury retail market, which revealed that Singapore’s prime retail sector along Orchard Road, a popular shopping destination, was one of eight international luxury retail locations that saw an increase in headline prime rents. According to the consultancy, Orchard Road’s prime rents increased by 4.1%, ranking it eighth on the list. This was followed by Toronto’s Bloor Street, which saw a surge of 16% in prime retail rents, and New York’s Madison Avenue, which experienced a 9.5% increase. Other locations that saw an increase in prime retail rents were Amsterdam’s PC Hooftstraat, Milan’s V Monte Napoleone, Madrid’s Ortega y Gasset, Hong Kong’s Canton Road (4.3%), and Berlin’s Kurfurstendamm.
Marie Hickey, director of commercial research at Savills, attributes this increase in prime rents to a reduced availability of luxury retail spaces and improved occupier demand. However, she notes that prime rents in some core luxury destinations are still below pre-pandemic levels, particularly in large and high-value markets like Singapore, New York, Hong Kong, and London. In fact, Savills’ research shows that prime retail rents in Singapore in 4Q2023 are still 23% lower than in 4Q2019, before the pandemic.
Hickey explains that this difference has led to an increase in leasing demand, as long as the quality of the space and market dynamics are favorable. She also adds that luxury brands are now focusing on expanding their best-performing stores while shedding marginal ones. This has resulted in a trend of single-story stores moving to duplexes or triplexes, where they can better showcase their products to customers. This trend is particularly evident on Canton Road in Hong Kong, where a row of luxurious storefronts lines the Harbor City side of the street. Marina Bay Sands in Singapore has also followed suit.
Sulian Tan-Wijaya, executive director of retail and lifestyle at Savills Singapore, emphasizes that Singapore has a high number of affluent consumers, and the shortage of real estate is the main constraint for new luxury store openings. She notes that there is significant interest from luxury watch and jewelry brands to expand in Singapore with unique experiential concepts catering to their top-tier customers. However, with only a handful of high-end malls in Singapore, Tan-Wijaya adds that it could take years for some brands to secure a space, as many established luxury brands are unwilling to move out.
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