Singapore Commercial Real Estate: Investor Optimism
As Singapore’s commercial real estate market navigates the complexities of 2025, investor sentiment has strengthened considerably, with year-to-date transaction values reaching S$9.85 billion through August 31. This represents a 12.5% increase compared to the same period in the prior year.
This uptick reflects a confluence of firm market fundamentals and declining funding costs, which have narrowed bid-ask spreads and brought more assets to market. CBRE forecasts a 5-10% year-on-year rise in investment volumes for 2025, underscoring the sector’s resilience despite global headwinds including slowing growth in the United States and Europe, alongside persistent trade uncertainty.
Industrial assets have emerged as the leading investment category, accounting for S$2.74 billion across 87 deals during the January to August period. The sector continues to benefit from robust demand drivers, including e-commerce expansion, supply chain optimization, data center development, and advanced manufacturing requirements.
Prime logistics rents increased 4.3% year-on-year in 2024, while warehouse rents rose 4.2%, with Q1 2025 marking the 18th consecutive quarter of growth. Occupancy rates have remained steady at 89%, reflecting sustained tenant demand for high-specification facilities. These long-term secular trends make industrial and logistics assets more resilient to short-term economic fluctuations compared to other CRE sectors. However, industrial space deliveries expected to reach 920,000 sqm in 2025—nearly triple 2024 levels—could temper rental growth in the near term.
The retail sector recorded 59 transactions worth S$2.03 billion, representing a 13% increase in transaction value compared to the previous year. Notable acquisitions included Frasers Centrepoint Trust’s purchase of full ownership in Northpoint City South Wing for S$1.13 billion.
CapitaLand Integrated Commercial Trust’s acquisition of a 55% stake in CapitaSpring for S$1.05 billion was also significant. Suburban malls have demonstrated stability and rental growth driven by local necessity spending, while prime Orchard Road locations face challenges from tourist spending patterns shifting toward experiences and the strength of the Singapore dollar.
Office sector dynamics reveal a two-tier market, with Grade A rental growth forecast at 2.0% to 3.0% for 2025. Meanwhile, Grade B properties face flat to negative 2.0% rental adjustments amid capital expenditure requirements for modernization.
Island-wide vacancy rates increased from 10.6% to 11.7% following 111,700 square meters of new supply. Cushman & Wakefield projects overall rental growth of 2.8% for 2025, moderating from 4.0% in 2024.
This slowdown is partly due to investors increasingly focusing on prime green-certified assets and value-add opportunities in secondary properties. Properties with BCA Green Mark certification command 3-5% higher premiums, reflecting growing environmental consciousness among buyers and the preference for sustainable developments.
