Real Estate Market Facing Mixed Signals Going 2025 Opportunities Remain Cbre
The release of CBRE’s Singapore Market Outlook 2025 report on Jan 23 has shed some light on the uncertain macroeconomic outlook and its impact on the real estate market over the next 12 months. While some factors, such as easing inflation and interest rates, are expected to provide relief, there are concerns that slowing economic growth may dampen demand for property.
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According to Moray Armstrong, managing director and advisory services at CBRE, the Ministry of Trade and Industry’s projection of Singapore’s GDP growth between 1% and 3% for 2025, compared to the 4% growth in 2024, could have a negative effect on the property market. Armstrong also highlights other potential variables that could influence the market in the near future, including global tensions, the new US administration’s economic agenda, and the upcoming release of the URA Master Plan 2025 in the middle of the year.
Despite these uncertainties, there are still opportunities in the real estate market for those who are able to capitalize on emerging trends, says Armstrong. Tricia Song, CBRE’s head of research for Singapore and Southeast Asia, shares this optimism and believes that the limited new supply and stable demand for property will continue to bolster the market. She predicts that the Singapore real estate market will remain stable and resilient, maintaining its appeal to investors from around the world.
The real estate market is already showing signs of improvement, with developer sales volume surging threefold in the last quarter of 2024 and prices rising by 2.3% compared to the previous quarter. While this rebound has led to speculations of possible cooling measures, CBRE does not see this as a likely scenario unless prices see a sharp increase in the coming quarters. With developers expected to launch an estimated 12,000 to 14,000 new units this year, CBRE projects a higher sales volume of 7,000 to 8,000 units, which could result in a price growth of 3% to 6% in 2025.
Limited supply is also expected to support rental rates in the private residential market, with CBRE predicting a growth of 1% to 3% this year. In the office market, however, uncertainties and hybrid work arrangements are likely to slow leasing activity, but the limited pipeline of new office space over the next three years will keep vacancy rates low. As a result, CBRE predicts a rental growth of about 2% for prime CBD (Grade A) offices in 2025.
The retail property market is also expected to see limited supply, which will support rental rates. CBRE believes that leasing sentiment in this sector remains positive, thanks to inbound tourism and a robust pipeline of events and entertainment. As such, they project an average rental growth of 2% to 3% this year.
The industrial sector saw a subdued demand in 2024 due to cost pressures and supply chain disruptions, leading to a consolidation of rents for prime logistics properties. With a bumper supply of almost 5 million sq ft of warehouse space expected to be completed this year, CBRE predicts a relatively flat rental rate for prime logistics properties in 2025.
Despite the economic and geopolitical uncertainties, CBRE anticipates real estate investment volume to continue growing in Singapore in 2025, though at a slower pace. According to their latest Asia Pacific Investor Intentions Survey, investors are more likely to invest in industrial and logistics properties, followed by residential and office properties. CBRE expects a 10% increase in investment volumes in 2025, barring any major shocks to the economy.
