CBRE’s Singapore Market Outlook 2025 report, released on January 23, predicts that the real estate market may experience divergent outcomes in the next 12 months due to an uncertain macroeconomic outlook. On one hand, easing inflation and interest rates are expected to provide some relief to the property market. However, Moray Armstrong, managing director and advisory services at CBRE, warns that slowing economic growth in 2025 could negatively impact property demand. The Ministry of Trade and Industry is projecting Singapore’s GDP growth to be between 1% and 3% in 2025, lower than the 4% growth recorded in 2024.
Armstrong also notes that other factors such as ongoing geopolitical tensions, the US’s new nationalistic economic agenda, and the URA Master Plan 2025, which is set to be released in the middle of the year, could potentially affect the market in the near term. Despite these mixed signals, there are still opportunities in the real estate market for those who can capitalize on emerging trends, he adds.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, remains optimistic and believes the property market is still supported by limited new supply and stable demand levels. She predicts that despite uncertainties, the Singapore real estate market will continue to show its stability and resilience, making it a popular choice for investors from all over the world.
The report also highlights the private residential market, which saw a threefold increase in developer sales volume to 3,511 units in the last quarter of 2024. This rebound from record lows in the first nine months of the year was accompanied by a 2.3% increase in prices, the highest quarterly growth in 2024. While some speculated that this could lead to new cooling measures, CBRE believes this is unlikely to happen unless prices surge in the coming quarters.
In light of improved sentiment, developers are expected to launch new projects, with an estimated 12,000 to 14,000 units potentially being launched this year – nearly double the 6,647 units launched in 2024. This could result in 7,000 to 8,000 new homes being sold in 2025, an increase from the 6,469 units sold in 2024. CBRE expects prices to grow by 3% to 6% in 2025, continuing the 3.9% growth seen in 2024. Meanwhile, rental rates are predicted to increase between 1% and 3% this year.
In the office property market, rentals in the Core CBD (Grade A) segment grew by just 0.4% in 2024, a slowdown from the 1.7% growth in 2023 due to global economic uncertainties, rising fit-out costs, and hybrid work arrangements. With economic growth expected to slow in 2025, CBRE projects that office leasing activities will remain muted as uncertainties dampen expansionary demand. However, limited new supply in the next three years, with only 0.58 million sq ft expected to be completed annually between 2025 and 2027, may keep vacancy rates low. As a result, the firm predicts a 2% increase in Core CBD (Grade A) office rentals in 2025, in line with GDP projections.
Limited supply is also expected to support retail property rents, with only 0.5 million sq ft of new retail space expected to be completed in 2025, a 40.4% decrease from 2024 and well below the 10-year historical average. CBRE adds that leasing sentiment for retail property remains positive, supported by inbound tourism and a robust pipeline of entertainment and other events. Therefore, the firm forecasts 2% to 3% growth in average retail prime rents in 2025, recovering to pre-pandemic levels.
In contrast, prime logistics rents have been consolidating due to subdued expansion demand by occupiers in 2024, recording only a 1.1% increase to $1.87 psf per month. A bumper supply of almost 5 million sq ft of warehouse space is expected to be completed this year, but at least 60% has already been pre-committed, which CBRE says should prevent a significant drop in occupancy rates. The firm predicts that prime logistics rents will remain relatively flat in 2025.
In terms of investment sales, CBRE expects real estate investment volume in Singapore to continue growing in 2025, following a 28% year-on-year increase in 2024 to $28.62 billion. This was driven by investor sentiment and appetite, bolstered by interest rate cuts. The firm anticipates this trend to persist in 2025, with the majority of investors expecting to purchase the same or more in Singapore real estate compared to 2024, according to its latest Asia Pacific Investor Intentions Survey. However, given ongoing economic and geopolitical uncertainties, CBRE believes investors will be selective in the near term, choosing to allocate capital into sectors or strategies with a more favorable outlook. The firm predicts a 10% year-on-year growth in investment volumes in 2025, barring any significant shocks. The industrial and logistics sector remains the most preferred among investors, followed by residential assets and office properties, according to the survey.