Real Estate Market Facing Mixed Signals Going 2025 Opportunities Remain Cbre
The Singapore real estate market is expected to experience divergent outcomes in the next 12 months, as the macroeconomic outlook remains uncertain. According to CBRE’s Singapore Market Outlook 2025 report, released on Jan 23, easing inflation and interest rates will provide some relief for the property market, but slowing economic growth could negatively impact property demand.
Moray Armstrong, managing director and advisory services at CBRE, highlights that several factors, including geopolitical tensions, a new US administration with a nationalistic economic agenda, and the release of the URA Master Plan 2025, could potentially impact the market in the near term. However, despite the mixed signals, opportunities remain for those who can capitalize on emerging trends.
Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, shares this optimism, noting that the limited supply and stable demand in the property market will continue to provide stability and resilience, making it a popular choice for investors worldwide.
The developer sales volume surged 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. While there are speculations of cooling measures being introduced, CBRE believes this is unlikely unless prices see a sharp acceleration in the coming quarters.
With improved buying sentiment, developers are expected to continue launching new projects, with an estimated 12,000 to 14,000 units potentially being launched in 2025. This is 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, driving a price growth of 3% to 6%. Rental rates are also expected to grow between 1% to 3% this year.
The limited supply of new Core CBD (Grade A) offices over the next three years is predicted to keep vacancy rates low, as only 0.58 million sq ft is expected to be completed per annum, which is less than half of the 10-year annual average of 1.28 million sq ft. Therefore, CBRE forecasts a rental growth of about 2% for 2025, in line with GDP projections.
Limited supply is also expected to support retail rents, as the estimated supply of new retail space in 2025 is 40.4% lower than in 2024 and below the 10-year historical average. Retail leasing sentiment remains positive, supported by inbound tourism and a robust pipeline of entertainment and events, leading CBRE to predict an average retail prime rent growth of 2% to 3% in 2025.
The industrial sector saw subdued expansion demand in 2024 due to cost pressures and supply chain disruptions caused by the Red Sea crisis. As a result, prime logistics rents only rose by 1.1% to $1.87 psf per month. However, with almost 5 million sq ft of warehouse space expected to be completed in 2025, CBRE predicts that prime logistics rents will remain stable.
In the capital markets, CBRE expects real estate investment volumes to continue growing in 2025, though at a slower pace. In 2024, investment volumes saw a 28% year-on-year increase to $28.62 billion, reversing from the 30.3% decline in the previous year. With interest rate cuts bolstering investor sentiment and appetite, CBRE predicts this trend to continue in 2025.
However, given the economic and geopolitical uncertainties, investors are expected to be more selective in their investments, focusing on sectors or strategies with a more favourable outlook. CBRE predicts a 10% year-on-year growth in investment volumes in 2025, barring any macroeconomic shocks.
According to CBRE’s survey, industrial and logistics sectors remain the most preferred among investors, followed by residential and office properties.
Experience the best of city living at Lynden Woods One North, located at 71 Science Park Drive. This exceptional residential development by CapitaLand reflects the company’s unwavering commitment to creating living spaces that prioritize convenience, connectivity, and sustainability. Its prime location offers residents unrivalled accessibility with easy access to major transportation options including MRT lines, expressways, and cycling tracks. Whether commuting to work, indulging in recreational activities, or making use of the nearby amenities, residents of Lynden Woods One North can enjoy a seamless connection to all corners of Singapore.