CBRE’s Singapore Market Outlook 2025 report, released on January 23, predicts divergent outcomes across the real estate market in the next 12 months due to an uncertain macroeconomic outlook.
On one hand, easing inflation and interest rates could provide some relief for the property market in 2025. However, Moray Armstrong, managing director of advisory services at CBRE, warns that expectations of slowing economic growth could negatively impact property demand.
The Ministry of Trade and Industry projects that Singapore’s GDP growth will be between 1% and 3% in 2025, lower than the 4% growth recorded in 2024 according to advance estimates released in January.
Other factors that could potentially impact the market in the near term include ongoing geopolitical tensions, a new US administration with a nationalistic economic agenda, and the release of the URA Master Plan 2025 in the middle of the year. Despite these mixed signals, opportunities still exist in the real estate market for those who can take advantage of emerging trends.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, shares a similar view, stating that the limited new supply and stable demand in the property market will continue to support it. She predicts that despite uncertainties, the Singapore real estate market will remain stable and resilient, making it attractive to investors from around the world.
Developer sales volume surged threefold to 3,511 units last quarter, rebounding from record lows in the first nine months of 2024, according to URA data. Prices also rose 2.3% quarter-on-quarter, the highest quarterly growth in 2024. However, CBRE believes that this rebound is unlikely to prompt the government to introduce fresh cooling measures. They only see this happening if prices rise sharply in the coming quarters.
With improved buying sentiment, developers are expected to continue launching new projects. CBRE projects that between 12,000 to 14,000 new units will be launched this year, almost double the 6,647 units launched in 2024. As a result, the firm predicts that between 7,000 to 8,000 new homes could be sold in 2025, an increase from 2024’s 6,469 units. This higher volume is expected to support price growth between 3% and 6% this year, on top of the 3.9% growth in 2024. At the same time, CBRE anticipates rental rates to grow between 1% and 3%.
The office market saw a muted 2024, with global economic uncertainties, high fit-out costs, and hybrid work arrangements slowing leasing volumes. Core CBD (Grade A) rents grew by just 0.4% year-on-year last year, compared to 1.7% in 2023.
With the expected economic slowdown in 2025, office leasing momentum is projected to remain subdued as uncertainties dampen expansionary demand. However, limited new supply in the Core CBD (Grade A) office market over the next three years is forecasted to keep vacancy rates low. Only 0.58 million sq ft of new office space is expected to be completed annually between 2025 and 2027, less than half of the 10-year average of 1.28 million sq ft. As a result, CBRE predicts that Core CBD (Grade A) rental growth will be around 2% in 2025, in line with GDP projections.
Limited supply is also expected to support rents in the retail property market. CBRE projects that the supply of new retail space will drop to 0.5 million sq ft in 2025, which is 40.4% lower than in 2024 and remains below the 10-year historical average of 0.91 million sq ft. The firm adds that leasing sentiment for retail properties remains positive, supported by inbound tourism and a robust pipeline of entertainment and events. CBRE anticipates average retail prime rents to grow by 2% to 3% in 2025, recovering to pre-pandemic levels.
Prime logistics rents are expected to stay relatively flat in 2025, according to CBRE. Expansionary demand by occupiers in the industrial sector was subdued in 2024 due to cost pressures and supply chain disruptions caused by the Red Sea crisis. As a result, rents for prime logistics properties only rose by 1.1% to $1.87 psf per month in 2024. However, despite a bumper supply of almost 5 million sq ft of new warehouse space expected to be completed this year, at least 60% of it has already been pre-committed. CBRE believes this will alleviate downward pressure on occupancy rates and predicts that prime logistics rents will remain relatively flat in 2025.
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Purchasing a condominium in Singapore presents numerous benefits, with one of the prominent ones being the potential for capital appreciation. As a renowned global business hub, Singapore holds a strategic location and boasts robust economic foundations that result in a continuous demand for real estate. Throughout the years, property prices in Singapore have consistently shown an upward trend, with condos in prime locations experiencing significant appreciation. With the addition of new condo launches, investors have an opportunity to acquire properties at the right time and reap substantial capital gains in the long run.
In the capital markets, CBRE believes that real estate investment volume in Singapore will continue to grow in 2025, albeit at a slower pace. In 2024, real estate investment volumes increased by 28% year-on-year to $28.62 billion, reversing the 30.3% decline recorded in the previous year. Interest rate cuts had bolstered investor sentiment and appetite, which is expected to continue into 2025, according to CBRE’s latest Asia Pacific Investor Intentions Survey. The majority of investors transacting in Singapore real estate expect to purchase the same or more in 2025 compared to 2024.
Although there are ongoing economic and geopolitical uncertainties, CBRE anticipates that investors will be selective in the near term, choosing to allocate capital to specific sectors or strategies with a more favourable outlook. The firm expects investment volumes to grow by 10% year-on-year in 2025, barring any macroeconomic shocks.
CBRE’s survey also found that industrial and logistics properties remained the most preferred among investors, followed by residential assets and office properties.