2025 Property Market Outlook: Opportunities and Challenges Ahead

According to CBRE's Singapore Market Outlook 2025 report released on 23 January, the Singapore property market could chart divergent trajectories over the next 12 months amid prevailing macroeconomic uncertainties.

Market Outlook: Stability Amid Challenges

On one hand, easing inflationary pressures and declining interest rates are expected to continue providing a degree of support for the property sector. However, CBRE notes that expectations of slower economic growth in 2025 could dampen real estate demand.

The Ministry of Trade and Industry (MTI) forecasts Singapore's Gross Domestic Product (GDP) growth to moderate to between 1% and 3% in 2025, down from 4% in 2024. In addition, ongoing geopolitical tensions, potential nationalistic economic policies from the new US administration, and the upcoming release of the Urban Redevelopment Authority's (URA) Draft Master Plan 2025 around mid-year could all sway market directions.

Despite mixed signals, CBRE believes opportunities remain for market participants who can capitalise on emerging trends. The overall market continues to benefit from limited new supply and resilient underlying demand. Singapore's real estate sector is expected to remain stable and resilient, preserving its appeal to global investors.

Private Residential Market: New Project Launches Bolster Sales

According to URA data, developer sales surged three-fold quarter-on-quarter in 4Q2024 to 3,511 units, reversing the sluggish performance of the preceding three quarters. Prices rose 2.3% quarter-on-quarter, marking the highest quarterly increase of the year.

While this market rebound has sparked speculation about potential new cooling measures, CBRE views this as unlikely in the near term unless home prices spike significantly over the coming quarters.

Buoyed by improving buyer sentiment, developers are expected to ramp up their launch pipelines. Between 12,000 and 14,000 new private homes are projected to be launched in 2025—nearly double the 6,647 units launched in 2024. CBRE forecasts new home sales to reach between 7,000 and 8,000 units in 2025, up from 6,469 units in 2024.

Even with the influx of new launches, residential prices are projected to rise by 3% to 6% in 2025, extending 2024's 3.9% gain. Concurrently, private residential rents are anticipated to climb by 1% to 3%.

Office and Retail Markets: Constrained Supply Underpins Rentals

The office sector saw relatively muted performance in 2024, as global economic uncertainties, rising fit-out costs, and the widespread adoption of hybrid work arrangements weighed on leasing momentum. Core CBD (Grade A) office rents grew by just 0.4% for the full year, tapering from the 1.7% growth recorded in 2023.

With economic expansion set to moderate in 2025, office leasing demand is expected to remain subdued. Nonetheless, vacancy rates are anticipated to stay tight due to limited Core CBD (Grade A) office completions over the next three years. Between 2025 and 2027, average annual new supply is projected at around 580,000 sq ft—less than half the 10-year historical average of 1.28 million sq ft.

CBRE projects Core CBD (Grade A) office rental growth to hover around 2%, roughly tracking GDP growth expectations.

In the retail sector, new retail supply in 2025 is expected to drop to approximately 500,000 sq ft—a 40.4% decline compared to 2024 and well below the 10-year historical average of 910,000 sq ft.

Supported by a sustained recovery in international visitor arrivals and a vibrant calendar of entertainment events, retail leasing demand remains healthy. CBRE anticipates prime retail rents to grow by 2% to 3% in 2025, returning to pre-pandemic levels.

Logistics and Investment Markets: Rentals Stabilise as Investment Momentum Sustains

In 2024, expansionary demand across the industrial segment was curbed by cost pressures and supply chain disruptions arising from the Red Sea crisis. Prime logistics rents grew marginally by 1.1% to S$1.87 per square foot per month.

For 2025, nearly 5 million sq ft of warehouse space is slated for completion. However, with over 60% of this upcoming supply already pre-committed, upward pressure on vacancy rates should remain contained. CBRE expects prime logistics rents to hold steady throughout 2025.

In the investment market, total real estate investment sales in Singapore rose 28% year-on-year to S$28.62 billion in 2024, rebounding strongly from the 30.3% year-on-year contraction seen in 2023. CBRE notes that investor sentiment in 2025 will continue to find support from easing interest rates, with strong institutional interest in Singapore real estate enduring.

According to CBRE’s latest Asia Pacific Investor Intentions Survey, the majority of investors plan to maintain or expand their real estate exposure in Singapore in 2025. Nevertheless, against a backdrop of economic and geopolitical uncertainties, investors are likely to exercise greater selectivity, directing capital towards sectors and strategies with brighter prospects. Barring severe global economic shocks, CBRE expects Singapore's total real estate investment volume to grow by around 10% year-on-year in 2025.

The survey also highlighted that industrial and logistics assets remain the most preferred sector among investors, followed by residential and office properties.

Conclusion: Uncovering Opportunities Amid Stability

Despite prevailing macroeconomic headwinds, CBRE believes that Singapore's real estate fundamentals remain fundamentally sound. Bolstered by disciplined supply pipelines and resilient baseline demand, rents across residential, office, and retail segments are set to register growth in 2025, while investment activity is poised to maintain its upward trajectory.

For market players, navigating emerging trends and adopting a targeted strategy will be instrumental in capturing growth opportunities across Singapore's property landscape in 2025.