CBRE’s Singapore Market Outlook 2025 report, released on January 23, suggests that the real estate market could see divergent outcomes in the next 12 months due to the uncertain macroeconomic outlook.
While easing inflation and interest rates may provide some relief, the slowing economic growth in 2025 could potentially harm property demand, according to Moray Armstrong, managing director and advisory services at CBRE.
The Ministry of Trade and Industry predicts Singapore’s GDP to grow between 1% and 3% in 2025, lower than the 4% growth in 2024. This could be affected by various factors such as ongoing geopolitical tensions, a new US administration with a nationalistic economic agenda, and the URA Master Plan 2025, which is expected to be released in the middle of the year.
Despite these uncertainties, there are still opportunities in the real estate market for those who can capitalize on emerging trends, as noted by Armstrong. Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, also remains optimistic, citing limited new supply and stable demand as key factors that continue to bolster the property market.
The report also predicts a surge in developer sales volume in the last quarter, which rebounded from record lows in the first nine months of 2024. Prices have also risen, leading to speculations of cooling measures being introduced. However, CBRE believes this is unlikely unless prices rise rapidly in the coming quarters.
Developers are expected to launch new projects, potentially reaching 12,000 to 14,000 units this year, almost double the 6,647 units launched in 2024. This could lead to 7,000 to 8,000 units being sold in 2025, and a 3% to 6% price growth, surpassing the 3.9% growth in 2024. Rental rates are also expected to grow by 1% to 3% this year.
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The office market saw a slower growth in 2024, with just a 0.4% rental growth, compared to the 1.7% growth in 2023. Economic uncertainties, high fit-out costs, and hybrid work arrangements were cited as the main factors. With economic growth expected to slow in 2025, CBRE predicts the office leasing momentum will remain muted.
On the other hand, a limited supply of new office space is expected in the next three years, which could keep vacancy rates low. This could support a rental growth of about 2% in 2025, in line with GDP projections.
Similarly, the report predicts limited supply to support retail rents, with an expected drop in new retail space this year. Leasing sentiment for retail properties remains positive, and as such, the firm predicts a 2% to 3% growth in prime retail rents, recovering to pre-pandemic levels.
As for the industrial sector, the report suggests that expansion demand was subdued in 2024 due to cost pressures and supply chain disruptions. Rents for prime logistics properties remained flat at $1.87 psf per month. In 2025, a surge in supply is expected, with almost 5 million sq ft of new warehouse space being completed. However, at least 60% of this space has been pre-committed, which could alleviate downward pressure on occupancy rates. CBRE predicts prime logistics rents will remain stable in 2025.
The report also forecasts a 10% year-on-year growth in investment volume in 2025, with the industrial and logistics sector remaining the most preferred among investors. However, CBRE also anticipates investors to be selective amid economic and geopolitical uncertainties, opting to invest in specific sectors or strategies with more favorable prospects.