Singapore Retail Market 2026: Shop Closures Rise But Prime Retail Demand Stays Strong

Against the backdrop of geopolitical tensions and economic uncertainties, Singapore’s retail market remains bifurcated. The average price for retail space in the Central Region increased by 2.2% q-o-q in 1Q2026, compared with 1.7% quarterly increase in 4Q2025.

On the other hand, retail rents decreased by 0.6% q-o-q in 1Q2026, reversing the 0.6% quarterly increase in 4Q2025. But this was not an even decline, with rents in the Central Area falling 0.2% q-o-q, while rents in the city-fringe recorded a quarterly decline of 1.5%.

On a yearly basis, retail rents rose 1.8% last quarter, nearly matching the 1.9% y-o-y growth that was clocked in 4Q2025. This is broadly aligned with the relatively buoyant consumer sentiment in prime retail spaces, according to Knight Frank.

Leonard Tay, Head of Research at Knight Frank, suggests that last quarter’s rental decline could signal that some landlords are recalibrating their expectations and becoming more attuned to tenants’ operating pressures.

By engaging tenants directly and exploring how they might be better supported via in-mall marketing initiatives, landlords can focus on creating more conducive conditions for sustained occupancy over pre-terminated leases and vacant spaces, says Tay.

As landlords contend with rental growth, occupancy rates, and footfall, retailers struggle with challenges such as rising operating costs, manpower shortages, and e-commerce competition.  

Diving deeper into the recent trajectory of retail rents, research compiled by CBRE showed that prime rents increased by 0.5% q-o-q in 1Q2026, which matched the increase lodged in 4Q2025. The positive movement in prime retail rents is characterised by robust demand for prime floors and subdued interest for other floors, according to Tricia Song, Head of Research, Singapore and Southeast Asia, at CBRE.

With new retail supply over the next three years set to remain below historical averages, CBRE forecasts prime retail rents could grow by 1 – 2% in 2026.

The Middle East conflict may intensify headwinds

Despite a handful of retail closures that have made headlines in recent months, overall leasing momentum remained strong in Q12026. The latest real estate data released by URA on April 24 indicated that in 1Q2026, the islandwide retail market saw positive net absorption of about 86,000 sq ft, extending 4Q2025’s positive net absorption of about 366,000 sq ft.

The space take-up was led primarily by Food & Beverage (F&B) operators such as Tutto, Jumboree, and Molly Tea, fashion brands, and other lifestyle concepts. While leasing activity has remained consistent, the sharp spike in cessations reiterates that a challenging environment persists for the retail sector.

In general, retail closures have outpaced new retail entrants in both the retail trade and the F&B services sectors. In 1Q2026, retail trade entrants rose by 26.9% y-o-y, while closures increased by 29.2% on a yearly basis. Similarly, F&B services entries increased 7.7%, while cessations shot up 42.8%.

Wong Shanting, Director and Head of Research at Newmark, observes that despite new retail entrants picking up, the retail sector continues to face structural pressures, including hiring difficulties, high retail rents, and high operating costs.

“These pressures are set to intensify further in the coming quarters, as the ongoing Middle East conflict drives up energy costs and disrupts global supply chains, compounding an already challenging operating environment,” she says, and adds that the wave of mall ownership changes in recent months could increase retail rents in the near term, leaving little relief in sight for retailers.

Mixed outlook on 2026’s retail market

In summary, suburban areas are performing slightly better compared to prime shopping districts, with suburban markets, also known as the Outside Central Region (OCR), the overall retail vacancy rate was 4.1% last quarter, compared to the 4.4% vacancy rate in 4Q2025. This is attributed to an increase in the retail supply in this region from new mall completions like Lentor Modern, which opened earlier this year.

Meanwhile, vacancy along the prime Orchard Road shopping belt rose to 7.1% in 1Q2026, which is a worsening vacancy rate compared to the 6.6% recorded in 4Q2025. On the other hand, the vacancy rate in the Downtown Core rose to 6.3% last quarter, from 6.0% in 4Q025.

Wong notes that despite the significant tourism recovery seen in 2025, the ongoing Middle East conflict introduces new headwinds that could affect tourist arrivals and spending in 2026. 

Against this backdrop, retail expansion along prime Orchard Road may turn more cautious, with delays in new store rollouts by international retailers and a corresponding longer leasing decision cycle, and consumers pulling back on discretionary spending.

On the other hand, with travel disruptions for flights that usually transit through the Gulf hubs, Tay of Knight Frank suggests that Singapore is well positioned to attract Chinese and Japanese visitors looking to explore the city and the rest of Southeast Asia.

This could potentially lead to a more optimistic outlook for Orchard Road, driven by an estimated 17 to 18 million tourists with $31 to $32.5 billion in tourist spending forecasted by the Singapore Tourism Board for 2026. As such, Knight Frank forecasts prime retail rents at a growth rate between 2% and 4% in 2026.