CBRE’s report on the Singapore real estate market predicts divergent outcomes in the coming 12 months due to an uncertain macroeconomic outlook. While easing inflation and interest rates may provide some relief for the property market, there are concerns over slowing economic growth, which could negatively impact property demand. The Ministry of Trade and Industry projects GDP growth to be between 1% and 3% in 2025, down from the 4% growth recorded in 2024.
Moray Armstrong, managing director of CBRE’s advisory services, highlights that other factors such as geopolitical tensions, a new US administration, and the release of the URA Master Plan 2025 could also affect the market. However, despite these uncertainties, there are still opportunities for those who can capitalize on emerging trends, according to Armstrong.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, remains optimistic about the property market, noting that limited new supply and stable demand continue to support it. She predicts that the market will maintain its stability and resilience, making it a popular choice for global investors.
According to URA data, developer sales volume in the last quarter of 2024 increased threefold to 3,511 units, with prices rising by 2.3%. This rebound led to speculations of cooling measures being introduced, but CBRE believes this to be unlikely unless prices rise sharply in the next few quarters. With the improved buying sentiment, developers are expected to launch new projects, potentially reaching 12,000 to 14,000 units in 2025, almost double the amount launched in 2024. CBRE projects sales of 7,000 to 8,000 units this year, supporting price growth between 3% and 6%. Rental rates are also predicted to increase by 1% to 3%.
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Limited supply is also expected to support prime office and retail rents. The office market saw slower growth in 2024 due to global economic uncertainties and hybrid work arrangements. However, the limited pipeline of new offices over the next three years will keep vacancy rates low, leading to a projected rental growth of 2% for 2025. Retail property leasing sentiment remains positive, supported by tourism and a robust calendar of events, with average retail prime rents expected to grow by 2% to 3% and recover to pre-pandemic levels.
In the industrial sector, expansion demand was subdued in 2024 due to cost pressures and supply chain disruptions. This resulted in a 1.1% increase in prime logistics rents. However, with a bumper supply of warehouse space set to be completed this year, CBRE predicts that rents will remain flat in 2025. In terms of investment sales, CBRE expects the market to continue growing but at a slower pace. The Asia Pacific Investor Intentions Survey found that investors are still keen on the Singapore market, with a majority looking to purchase the same volume or more in 2025 compared to 2024. However, with ongoing economic and geopolitical uncertainties, investors are likely to be selective and allocate capital into sectors or strategies with more favorable outlooks. CBRE projects a 10% growth in investment volumes in 2025, barring any macroeconomic shocks. The industrial and logistics sector remains the most preferred among investors, followed by residential and office properties.