CBRE’s Singapore Market Outlook 2025 report, released on Jan 23, highlights the potential for divergent outcomes across the real estate market in the next 12 months due to an uncertain macroeconomic outlook.
While easing inflation and interest rates are expected to provide some relief for the property market, Moray Armstrong, managing director and advisory services at CBRE, cautions that expectations of slowing economic growth in 2025 could harm property demand. The Ministry of Trade and Industry’s projection of 1-3% GDP growth for Singapore in 2025, lower than the 4% growth in 2024, further adds to this uncertainty.
Armstrong also points out that a range of other factors could potentially impact the market in the short term, including ongoing geopolitical tensions, a new US administration with a nationalistic agenda, and the upcoming release of the URA Master Plan 2025 in mid-year. Despite these mixed signals, opportunities are still present in the real estate market for participants who can capitalize on emerging trends.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, shares this optimism, noting that the market continues to be buoyed by limited new supply and stable demand. She predicts that despite the unknowns, the Singapore property market will maintain its trademark stability and resilience, appealing to investors from all over the world.
The report highlights that new launches are expected to sustain private residential sales momentum, with developer sales volume surging threefold to 3,511 units in the last quarter, rebounding from record lows in the first nine months of 2024. Prices also rose 2.3% quarter-on-quarter, the highest quarterly growth in 2024. The increase has prompted speculation of new cooling measures, but CBRE believes this is unlikely unless prices rise sharply in the coming quarters.
Developers are expected to continue launching new projects, potentially adding 12,000 to 14,000 units to the market this year, nearly double the 6,647 units launched in 2024. This is projected to result in 7,000 to 8,000 units sold in 2025, up from 6,469 units in 2024. CBRE predicts a price growth of 3-6% and rental growth of 1-3% for the year.
Limited supply is also expected to support prime office and retail rents, as URA data shows that developer sales volume surged threefold to 3,511 units last quarter, rebounding from record lows registered in the first nine months of 2024. Prices rose 2.3% q-o-q, marking the highest quarterly growth in 2024.
The rebound prompted speculations of fresh cooling measures, but CBRE believes this an unlikely scenario, citing limited supply and stable demand as the driving forces behind the market’s resilience. The report predicts rental rates will grow between 1% and 3% this year.
The limited supply is also expected to support rents in the retail property market, with an estimated 0.5 million sq ft of new retail space being launched in 2025, 40.4% lower than in 2024 and below the 10-year historical average of 0.91 million sq ft per annum. CBRE also notes that leasing sentiment for retail property remains positive, supported by inbound tourism and a robust pipeline of entertainment and events. As such, they predict average retail prime rents to grow by 2-3% in 2025, recovering to pre-pandemic levels.
In the industrial sector, CBRE predicts that a bumper supply of almost 5 million sq ft of warehouse space will be completed this year. However, 60% of this space has already been pre-committed, which should prevent downward pressure on occupancy rates and keep prime logistics rents relatively flat in 2025.
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Despite this, CBRE believes real estate investment volume in Singapore will continue to grow in 2025, albeit at a slower pace. Interest rate cuts and bolstered investor sentiment and appetite are expected to persist into 2025, with the majority of investors transacting in Singapore real estate anticipating purchasing the same volume or more compared to 2024. However, given the ongoing economic and geopolitical uncertainties, CBRE predicts investors will be more selective, opting for specific sectors or strategies with a more favorable outlook. They anticipate a 10% year-on-year growth in investment volumes in 2025, barring any major macroeconomic shocks.
CBRE’s survey also found that the industrial and logistics sector remained the most preferred among investors, followed by residential properties and office properties.