CBRE’s Latest Report Predicts Divergent Outcomes in Singapore’s Real Estate Market in the Next 12 Months
According to the recently released CBRE Singapore Market Outlook 2025 report, the uncertain macroeconomic outlook may result in divergent outcomes across the real estate market in the next 12 months.
On one hand, the property market may continue to experience some relief from easing inflation and interest rates. However, the managing director and advisory services at CBRE, Moray Armstrong, warns that expectations of slowing economic growth in 2025 could negatively affect property demand.
The Ministry of Trade and Industry is projecting Singapore’s GDP growth to be between 1% and 3% in 2025, a decrease from the 4% growth seen in 2024 based on advance estimates released in January.
Armstrong also notes that there are other factors that could potentially impact the market in the near future, such as ongoing geopolitical tensions, a new US administration with a nationalistic economic agenda, and the expected release of the URA Master Plan 2025 in the middle of the year. Despite these uncertainties, there are still opportunities in the real estate market for those who can take advantage of emerging trends.
CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, shares a similar sentiment, stating that the property market continues to benefit from limited new supply and stable levels of demand. She believes that the Singapore real estate market will remain stable and resilient, making it a popular choice for investors globally.
New Launches Expected to Sustain Private Residential Sales Momentum
According to URA data, developer sales volume increased threefold to 3,511 units in the last quarter, rebounding from record lows in the first nine months of 2024. Prices also rose by 2.3% quarter-on-quarter, the highest quarterly growth in 2024.
Although this rebound led to speculation of new cooling measures being introduced, CBRE believes that this is unlikely to happen unless prices surge significantly in the coming quarters. With improved buying sentiment, developers are expected to move forward with launches. It is estimated that between 12,000 to 14,000 new units will be launched this year, almost double the 6,647 units launched in 2024. As a result, CBRE predicts that between 7,000 to 8,000 new homes could be sold in 2025, an increase from the 6,469 units sold in 2024.
The higher volume of new launches is expected to support price growth ranging between 3% and 6% in 2025, following the 3.9% growth seen in 2024. At the same time, CBRE predicts that rental rates will grow between 1% and 3% this year.
Limited Supply to Boost Prime Office and Retail Rents
The office market had a quieter year in 2024, with global economic uncertainties, higher fit-out costs, and hybrid work arrangements slowing leasing volumes. Core CBD (Grade A) rents grew by only 0.4% year-on-year, a decrease from the 1.7% rental growth recorded in 2023.
With economic growth projected to slow in 2025, CBRE anticipates that office leasing momentum will remain subdued as uncertainties temper expansionary demand. However, a limited pipeline of new Core CBD (Grade A) offices over the next three years is expected to keep vacancy rates low. Only about 0.58 million sq ft of new office space will be completed annually between 2025 and 2027, less than half of the 10-year annual average of 1.28 million sq ft.
As a result, CBRE predicts that the limited medium-term supply and continued preference for quality by occupiers will support Core CBD (Grade A) rental growth of about 2% in 2025, in line with GDP projections.
Limited supply is also expected to boost rents in the retail market. The expected supply of new retail space is forecasted to decrease to 0.5 million sq ft in 2025, which is 40.4% lower than 2024 levels and below the 10-year historical average of 0.91 million sq ft per annum.
CBRE also notes that leasing sentiment for retail properties remains positive, supported by inbound tourism and a robust pipeline of entertainment and events. As such, the firm predicts that average retail prime rents will grow by 2% to 3% in 2025, recovering to pre-pandemic levels.
Prime Logistics Rents Likely to Remain Flat, Investment Sales Momentum to Continue
According to CBRE, expansion demand by occupiers in the industrial sector was muted in 2024 due to cost pressures and supply chain disruptions caused by the Red Sea crisis. As a result, prime logistics rents increased by only 1.1% to $1.87 psf per month in 2024.
In 2025, a bumper supply of almost 5 million sq ft of warehouse space is expected to be completed. However, CBRE notes that at least 60% of this new space has already been pre-committed, which should alleviate downward pressure on occupancy rates. Therefore, the firm predicts that prime logistics rents will remain relatively flat in 2025.
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Meanwhile, in the capital markets, CBRE believes that real estate investment volumes in Singapore will continue to grow in 2025, although at a slower pace. In 2024, investment volumes saw a 28% year-on-year increase to $28.62 billion, reversing a 30.3% decline in the previous year.
This was due to interest rate cuts that boosted investor sentiment and appetite, which is expected to persist in 2025, according to CBRE’s latest Asia Pacific Investor Intentions Survey. The majority of investors transacting in Singapore real estate expect to purchase the same volume or more in 2025 compared to 2024.
However, given ongoing economic and geopolitical uncertainties, CBRE anticipates that investors will be selective in the near term and allocate capital into sectors or strategies with a more favorable outlook. The firm expects a 10% year-on-year growth in investment volumes in 2025, barring any macroeconomic shocks.
The survey also found that the industrial and logistics sector remained the most preferred among investors, followed by residential assets and office properties.