According to CBRE’s Singapore Market Outlook 2025 report, the real estate market may diverge over the next 12 months due to an uncertain macroeconomic outlook. While easing inflation and interest rates may provide relief for the property market, slowing economic growth could hinder demand. The Ministry of Trade and Industry predicts a GDP growth of 1-3% in 2025, down from the 4% growth seen in 2024. According to Moray Armstrong, the managing director of CBRE’s advisory services, various factors such as geopolitical tensions, a new US administration, and the upcoming URA Master Plan 2025 could also impact the market. However, despite these uncertainties, there are still opportunities for those who can capitalize on emerging trends, says Armstrong.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, shares the same optimism, stating that the property market is supported by limited new supply and stable demand. She predicts that the market will continue to display its renowned stability and resilience, making it a popular choice among global investors.
In the private residential sector, a surge in developer sales volume was recorded in the last quarter of 2024, with a threefold increase to 3,511 units. This rebounded from the record-low numbers seen in the first nine months of the year. Additionally, prices rose 2.3% quarter-on-quarter, the highest quarterly growth in 2024.
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However, CBRE believes that this rebound will not lead to the implementation of new cooling measures unless there is a significant increase in prices in the coming quarters. With improved buying sentiment, developers are expected to launch around 12,000 to 14,000 new units this year, almost double the 6,647 units launched in 2024. This is anticipated to result in the sale of 7,000 to 8,000 new homes in 2025, up from the 6,469 units sold in 2024. CBRE projects a price growth between 3% and 6% this year, following the 3.9% growth recorded in 2024. At the same time, rental rates are predicted to rise between 1% and 3% this year.
In the office market, 2024 saw a slower growth due to global economic uncertainties, high fit-out costs, and hybrid work arrangements. Grade A rents in the core Central Business District (CBD) grew by just 0.4% year-over-year, a significant drop from the 1.7% rental growth seen in 2023. With economic growth projected to decrease in 2025, CBRE expects office leasing momentum to remain sluggish as uncertainties dampen demand.
On the other hand, limited new supply of Grade A offices in the core CBD in the next three years is expected to result in low vacancy rates. Only 0.58 million sq ft of new office space is estimated to be completed annually between 2025 and 2027, which is less than half of the 10-year average of 1.28 million sq ft per year. As a result, CBRE forecasts a 2% rental growth for Grade A offices in the core CBD this year, in line with GDP projections.
The retail property market is also expected to experience a similar trend due to limited supply. New retail space is forecasted to decrease to 0.5 million sq ft in 2025, which is 40.4% lower than the supply in 2024 and below the 10-year historical average of 0.91 million sq ft per year. CBRE notes that leasing sentiment for retail properties remains positive, supported by tourism and a robust pipeline of entertainment and other events. The firm predicts a rental growth of 2% to 3% this year, bringing rents back to pre-pandemic levels.
While prime logistics property rents grew by 1.1% in 2024, a bumper supply of almost 5 million sq ft of warehouse space is expected to be completed this year. However, CBRE believes that at least 60% of this new space has already been pre-committed, mitigating the risk of downward pressure on occupancy rates. Thus, prime logistics rents are expected to remain relatively flat in 2025.
In terms of investment, CBRE predicts that real estate investment in Singapore will continue to grow, although at a slower pace. In 2024, investment volumes saw a 28% year-over-year increase to $28.62 billion, a significant improvement from the 30.3% decline in the previous year. This was due to interest rate cuts that bolstered investor sentiment, which is expected to persist into 2025. According to CBRE’s Asia Pacific Investor Intentions Survey, the majority of investors are planning to purchase the same amount or more in Singapore real estate this year compared to 2024.
However, given the ongoing uncertainties, investors are expected to be selective in their investments, preferring specific sectors or strategies with a more favorable outlook. CBRE anticipates a 10% year-over-year growth in investment volumes in 2025, barring any macroeconomic shocks.
The survey also found that the industrial and logistics sector remains the most popular among investors, followed by residential and office properties.