CBRE’s report on the Singapore market outlook for 2025 highlights the potential for divergent outcomes in the real estate market due to an uncertain macroeconomic outlook. While easing inflation and interest rates may provide some relief, slowing economic growth could dampen property demand. The Ministry of Trade and Industry is projecting a 1-3% GDP growth for 2025, down from the 4% growth in 2024.
CBRE’s managing director, Moray Armstrong, notes that various factors such as geopolitical tensions, a new US administration with a nationalistic economic agenda, and the upcoming release of the URA Master Plan 2025 could potentially impact the market. However, despite these uncertainties, opportunities remain for those who can capitalize on emerging trends.
CBRE’s head of research for Singapore and Southeast Asia, Tricia Song, remains optimistic about the property market, with limited new supply and stable demand supporting its stability and resilience. She predicts that the market will continue to be popular with investors.
The recent surge in developer sales volume, which saw a threefold increase in the last quarter of 2024, is expected to sustain momentum into 2025 due to improved buying sentiment. CBRE anticipates a potential launch of 12,000 to 14,000 new units this year, almost double the number launched in 2024. This is projected to result in 7,000 to 8,000 units being sold in 2025, supporting price growth of 3-6% and rental rate growth of 1-3%.
In the office market, the uncertain economic outlook and hybrid work arrangements are expected to dampen leasing volumes. However, limited new supply over the next three years is projected to keep vacancy rates low. CBRE predicts rental growth of 2% for 2025, in line with GDP projections. The limited new supply in the retail market is also expected to support rental growth of 2-3%.
The industrial sector saw subdued expansion demand in 2024 due to cost pressures and supply chain disruptions. However, a bumper supply of 5 million sq ft of warehouse space is expected to be completed in 2025, with at least 60% already pre-committed. CBRE predicts flat rental rates for prime logistics properties in 2025.
The real estate investment volume in Singapore is expected to continue growing in 2025, although at a slower pace. Investor sentiment and appetite are bolstered by the recent interest rate cuts, according to CBRE’s latest Asia Pacific Investor Intentions Survey. The majority of investors expect to purchase the same or more in 2025 compared to 2024, with the industrial and logistics sector remaining the most preferred. However, ongoing uncertainties could lead investors to be more selective in their investments, with a 10% y-o-y growth projected for 2025.