Correlation between Closure of High-profile Retail Stores and Rental Trends

Ms Elysa Chen asked the Deputy Prime Minister and Minister for Trade and Industry in light of higher-profile retail store closures recently, how does the Ministry reconcile official data suggesting that rent has declined as a proportion of business costs with the lived experiences of local retailers.

At the macro level, rent increases for retail spaces have broadly tracked economic fundamentals, trending below nominal gross domestic product growth and inflation in the last few years. Between 2019 and 2024, rental costs as a share of total business costs declined from 26% to 17% for the food and beverage sector and from 30% to 26% for the retail sector.

But at the local level, rental costs can vary for retailers due to attributes, such as proximity to key transport nodes or estates with high population density. They can also vary based on factors, such as the property type, unit level and demand.

Different retailers face different cost structures and business circumstances. Aside from rent, retailers may also face other cost pressures, such as raw materials and labour. Businesses may decide that it may be more viable to restructure, scale down or exit their operations.

Nonetheless, we continue to strive to support local retailers and small and medium enterprises (SMEs) in strengthening their capabilities and competitiveness. This includes providing schemes, such as the Enterprise Development Grant and Productivity Solutions Grant, which help SMEs transform and enhance their productivity. The Government also offers targeted programmes that encourage local retailers to innovate and provide differentiated offerings. An example is the Retail Maverick Challenge, which enables local retailers to pilot innovative and experiential retail concepts.

The Government is continuing to engage and work closely with industry stakeholders and key trade associations, such as the Singapore Retailers Association, to assess and enhance our support for Singapore enterprises through these transitions.