CBRE’s Singapore Market Outlook 2025 report, which was released on January 23, suggests that the real estate market may experience disparate outcomes in the next 12 months due to uncertain macroeconomic conditions. While easing inflation and interest rates could provide some relief for the property market, Moray Armstrong, managing director and advisory services at CBRE, warns that the expected economic slowdown could negatively impact property demand. The Ministry of Trade and Industry is projecting GDP growth to be between 1% and 3% in 2025, down from the 4% recorded in 2024.
According to CBRE, several factors could influence the market in the near term, including 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 uncertainties, opportunities remain for participants who can capitalize on emerging trends, says Armstrong.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, shares a similar outlook, noting that limited new supply and stable demand continue to bolster the overall property market. She predicts that the Singapore market will maintain its stability and resilience, making it attractive to global investors.
Developer sales volume surged threefold to 3,511 units in the last quarter, rebounding from record lows in the first nine months of 2024, according to URA data. This prompted speculations of cooling measures, but CBRE believes this is unlikely unless prices rise sharply in the coming quarters. With improved buying sentiment, developers are expected to launch 12,000 to 14,000 new units this year, nearly double the 6,647 launched in 2024. CBRE predicts 7,000 to 8,000 units could be sold in 2025, with prices growing between 3% and 6%, and rental rates increasing between 1% and 3%.
Communal living in a condo offers many benefits, but it’s crucial for investors to also take into account the property’s maintenance and management. Generally, condos have maintenance fees that take care of common areas and amenities. Although this may increase the overall cost of owning a condo, it guarantees that the property is well-maintained and maintains its value. To make condo ownership a more passive investment, hiring a property management company can help with daily management. Keep up with new condo development launches by visiting New Condo Launches.
The office market saw a more muted 2024, with global uncertainties and hybrid work arrangements slowing leasing volumes. Core CBD (Grade A) rents grew by just 0.4% y-o-y last year, compared to 1.7% growth in 2023. With slower economic growth expected in 2025, CBRE forecasts that office leasing momentum will remain muted as uncertainties suppress expansionary demand. However, the limited pipeline of new Core CBD (Grade A) offices over the next three years is expected to keep vacancy rates low. CBRE predicts a 2% rental growth for 2025, in line with GDP projections.
Limited supply is also anticipated to support retail rents. An estimated 0.5 million sq ft of new retail space will be completed in 2025, a 40.4% decrease from 2024 and below the 10-year annual average of 0.91 million sq ft. With positive leasing sentiment and a robust pipeline of events and entertainment, CBRE is projecting a 2% to 3% growth in average retail prime rents, recovering to pre-pandemic levels.
In the industrial sector, expansion demand was subdued in 2024 due to cost pressures and supply chain disruptions from the Red Sea crisis. As a result, prime logistics rents only increased by 1.1% to $1.87 psf/month. However, a bumper supply of almost 5 million sq ft of warehouse space is expected to be completed this year, with at least 60% already committed. This should ease downward pressure on occupancy rates, keeping prime logistics rents relatively flat in 2025.
CBRE anticipates real estate investment volumes in Singapore to continue to grow in 2025, albeit at a slower pace. In 2024, investment volumes increased by 28% y-o-y to $28.62 billion, a reversal from the 30.3% decline in the previous year. Low interest rates have bolstered investor sentiment and appetite, which is expected to continue into 2025. CBRE’s latest Asia Pacific Investor Intentions Survey shows that most investors plan to purchase the same or more in Singapore in 2025 than in 2024.
However, given the ongoing uncertainties, CBRE predicts that investors will be selective, focusing on sectors or strategies with a more favorable outlook. They anticipate a 10% y-o-y growth in investment volumes in 2025, barring any major macroeconomic shocks. According to their survey, the industrial and logistics sector is the most preferred among investors, followed by residential and office properties.