Rewritten:
According to the Singapore Market Outlook 2025 report released by CBRE on January 23, the real estate market may experience divergent outcomes in the next 12 months due to an uncertain macroeconomic outlook.
On one hand, the easing inflation and interest rates are expected to provide some relief for the property market in 2025. However, Moray Armstrong, managing director and advisory services at CBRE, warns that the projected slow economic growth may have a negative impact on property demand.
The Ministry of Trade and Industry is predicting 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 notes that other factors 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 may also influence the market in the near future. However, despite these uncertain signals, opportunities still exist for those who can capitalize on emerging trends in the real estate market, he adds.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, also remains positive, stating that the limited supply and stable demand continue to bolster the property market. She predicts that the Singapore real estate market will continue to demonstrate its stability and resilience, making it attractive to investors from around the world.
New launches are expected to sustain the momentum of private residential sales. According to the URA data, developer sales volume tripled to 3,511 units in the last quarter, rebounding from record lows in the first nine months of 2024. Prices also saw a 2.3% quarterly growth, the highest in 2024.
Although this rebound may spark speculation of cooling measures being implemented, CBRE believes this is unlikely unless prices increase significantly in the next few quarters. With improved buying sentiment, developers are projected to launch about 12,000 to 14,000 units this year, nearly doubling the 6,647 units launched in 2024. As a result, CBRE estimates 7,000 to 8,000 new homes will be sold in 2025, an increase from the 6,469 units sold in 2024. This higher volume is expected to contribute to a price growth of 3% to 6% in 2025, continuing the 3.9% growth seen in 2024. Rental rates are also predicted to increase between 1% and 3% this year.
Limited supply is also expected to support prime office and retail rents. The office market saw slower growth in 2024 due to global economic uncertainties, high fit-out costs, and hybrid work arrangements. Core CBD (Grade A) rents only grew by 0.4% year on year, compared to the 1.7% growth seen in 2023.
In summary, the purchase of a condo in Singapore offers various benefits, including a strong demand, potential for increased value, and attractive rental returns. However, it is crucial to carefully evaluate factors like the condo’s location, financing options, government regulations, and the current market conditions. By conducting thorough research and seeking professional guidance, investors can make well-informed decisions and maximize their investments in Singapore’s dynamic real estate market. Whether a local investor seeking to diversify their portfolio or a foreign buyer looking for a stable and profitable investment, new condo launches in Singapore present a compelling opportunity.
As economic growth is expected to slow in 2025, the demand for office leasing is also projected to remain muted. However, the 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 each year between 2025 and 2027, less than half of the 10-year average of 1.28 million sq ft per year. As a result, CBRE predicts a rental growth of about 2% for Core CBD (Grade A) offices in 2025, in line with GDP projections.
Limited supply is also expected to support retail rents. The supply of new retail space is forecasted to decrease to 0.5 million sq ft in 2025, a 40.4% decrease from 2024 and significantly lower than the 10-year average of 0.91 million sq ft per year. CBRE also notes that leasing sentiment for retail properties remains positive due to inbound tourism and a strong pipeline of entertainment and other events. As a result, the firm predicts average retail prime rents will increase by 2% to 3% in 2025, returning to pre-pandemic levels.
Prime logistics rents, on the other hand, are expected to remain flat due to subdued expansion demand by occupiers and a bumper supply of almost 5 million sq ft of warehouse space expected to be completed in 2025. However, more than half of this new space has already been pre-committed, which should alleviate pressure on occupancy rates. CBRE predicts that prime logistics rents will remain relatively stable in 2025.
Despite the uncertain economic and geopolitical climate, CBRE anticipates real estate investment volume in Singapore to continue growing in 2025 but at a slower pace. In 2024, investment volumes increased by 28% year on year to $28.62 billion, reversing the 30.3% decline seen in the previous year. This was influenced by interest rate cuts that boosted investor sentiment, which is expected to continue into 2025. According to CBRE’s latest Asia Pacific Investor Intentions Survey, the majority of investors are likely to purchase the same or more properties in Singapore in 2025 compared to 2024.
However, CBRE believes that investors may be more selective in the near future, choosing to invest in specific sectors or strategies with a more favorable outlook due to ongoing uncertainties. Therefore, the firm predicts a 10% year on year growth in investment volume in 2025, assuming there are no major macroeconomic shocks.
According to CBRE’s survey, the industrial and logistics sector remains the top choice among investors, followed by residential and office properties.…