Singapore prime retail rents to increase by 2.9% per annum between 2022 and 2026

Capital values could also rise by 3.2% in the medium term.

According to a recent JLL report, wage inflation and rising consumer demand with sustained economic growth in an endemic COVID 19 norm should drive retail sales growth in the medium term. 

“Coupled with a tight supply pipeline of quality retail space (of less than 1.0% of existing stock annually over the next five years) and rising occupancy rates in many retail malls in good locations, rents of prime floor space in retail assets could rise by an above-trend annual average of about 2.9% between 2022 and 2026,” JLL said.

Here’s more from JLL:

Capital values of prime floor retail space could appreciate by an above-trend annual average of about 3.2% in the medium term on the back of a rising rent outlook and marginal yield compression, given the scarcity of tradeable assets and market liquidity, notwithstanding potential interest rate increases. 

The  Progressive Wage Model (PWM) stipulates minimum wages to be paid to employees in certain economic and occupational sectors. In the seven years since implementation, the PWM has been rolled out to 28,000 workers in the cleaning, security, landscaping and lift & escalator maintenance sectors, earning at or below the 20th percentile of wages in Singapore. 

In August 2021, the government took a decisive step to widen the coverage of PWM to three new sectors (namely, retail, food services and waste management) in an accelerated timeline. Progressive wages will also be introduced to certain occupations that cut across sectors. Specifically, progressive wages will be extended to 234,000 workers in seven sectors, as well as administrators and drivers across all sectors by 2023. This will constitute more than 80% of the 283,000 low wage workers in Singapore.