In addition, new completions are expected to taper further in 2027 before a fresh wave of supply from major redevelopment projects comes on stream from 2028 onwards. This includes projects from the redevelopment of Tanglin Shopping Centre and Tanjong Katong Complex.
As a result, annual retail completions are projected to average around 270,000 sq ft in NLA over the next two years, still higher than the record low of 237,000 sq ft completed in 2020. The softer supply pipeline is likely to “provide continued support for occupancy fundamentals and help cushion downward pressure on rents, particularly for well-positioned retail assets”, adds Savills Research.
Volatile start to 2026
Retail sales, excluding motor vehicles, showed a volatile start to 2026, according to Savills Research, as sales declined 2.4% y-o-y in January before rebounding by 12% y-o-y in February, driven by Chinese New Year spending.
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In March, growth moderated y-o-y to 0.6% as seasonal spending normalised, particularly in festive-driven categories such as supermarkets, cosmetics and apparel.
Taken together, retail sales in 1Q2026 recorded modest growth. According to the Urban Redevelopment Authority, the overall retail rental index for the central region declined 0.6% q-o-q in 1Q2026, while the retail rental index for the fringe area declined by a sharper 1.5% q-o-q after a 0.4% q-o-q dip in the prior quarter. In fact, retail rents in the fringe area reached a new record low in 1Q2026.
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Prime location held up
Singapore’s retail vacancy rate held steady at 6.3% in 1Q2026, below the 7% average over the past three years. This is largely due to a muted supply pipeline despite softer leasing demand and rising tenant churn. Meanwhile, well-positioned retail assets continued to enjoy strong occupancy rates, says Savills Research.
Leasing demand across the central region continued to soften in 1Q2026 as business closures created pockets of vacancy, especially in secondary locations and less-prominent units. However, suburban malls remained relatively resilient due to limited new supply and stable catchment demand, supporting net absorption of 140,000 sq ft during the quarter.
Retail rents showed mixed performance. According to Savills’ basket of retail properties, average monthly rents for prime Orchard Road malls edged up 0.1% q-o-q to $23.60 psf in 1Q2026, while suburban mall rents rose 0.2% to $14.90 psf.
Still, the broader market remained uneven. Savills highlights that Bugis Street, once a popular draw for local and tourist shoppers, now has only about 20% of its second-floor shops in operation due to weak occupier demand in less-visible locations.
In the Northeast, Northshore Plaza has also seen a string of closures, including Haidilao and Qi Ji, with some units remaining vacant for months amid subdued footfall.
In contrast, prime malls continued to attract tenants. At 313@Somerset, the ground-floor unit vacated by T2 Tea in March was quickly leased by jewellery retailer Goldheart, reflecting continued demand for high-footfall retail space in a prime location.
“The retail market is showing signs of bifurcation,” says Alan Cheong, executive director of research and consultancy at Savills Singapore. “While weaker secondary locations continue to face leasing challenges, the limited near-term supply pipeline is helping to keep overall vacancy stable and support occupancy fundamentals for stronger-performing assets.”
‘Limited incremental impact’ from RTS Link
Even as persistent cross-border spending “continues to exert pressure on certain retail segments”, Savills Research says the upcoming Johor Bahru-Singapore Rapid Transit System (RTS) Link will have “limited incremental impact” on domestic retail conditions, “given already high travel integration”.
In addition to steady tourist inflows supporting local retail sales, a strengthening Malaysian ringgit and rising prices in Malaysia may help moderate outbound spending leakage over time, adds Savills Research.
Separately, Yip Hoong Mun, group CEO of Metro Holdings, said at the group’s results briefing on May 22 that he expects Singapore to be impacted by the upcoming RTS Link. Speaking at a media and analyst briefing for the group’s results for FY2026 ended March 31, Yip attributes this to the relatively “cheaper goods in Johor, as well as the convenience that the upcoming RTS Link will bring to Singaporeans”.
Whether such convenience will eventually have a positive or negative impact remains to be seen, says Yip, adding that it “depends on how things develop” over time.
Mainboard-listed Metro Holdings currently operates two department stores in Singapore: Metro Paragon on Orchard Road and Metro Causeway Point in Woodlands. The stores span approximately 75,000 sq ft and 60,000 sq ft, respectively.
