Singapore retail weakens as costs rise and demand falls in Q1

A softer economic and employment outlook continues to dampen retail demand.

Singapore’s retail sector is facing mounting pressure as persistently high operating costs and subdued consumer spending weigh on business performance.

According to JLL’s latest report, a softer economic and employment outlook continues to dampen retail demand, raising concerns over business viability and contributing to an increase in store closures and vacancy rates, despite limited new supply entering the market.

Retail sales remain subdued as consumers stay cautious amidst weaker confidence, regional uncertainty, and higher travel costs. Tourism-related retail demand has also softened due to economic and geopolitical risks.

In Q1 2026, occupier demand declined quarter-on-quarter. Closures increased, especially amongst underperforming retailers in both Prime and Secondary submarkets.

Vacancy rates edged up slightly islandwide despite minimal new supply. Landlords are largely focused on maintaining occupancy levels amid economic uncertainty, helping to keep overall vacancy manageable. However, both Prime and Secondary submarkets recorded higher vacancy rates due to store closures.

Prime and suburban malls saw slight rental increases, supported by stronger assets in key locations with better tenant mix. In contrast, underperforming assets faced continued rental pressure due to weaker demand.

Despite market headwinds, capital values in both Prime and Suburban retail submarkets rose in Q1 2026, tracking rental growth.

Yields remained stable overall, supporting a healthy yield spread above funding costs. The suburban segment outperformed, driven by stronger transaction activity and mild yield compression.