An IMGW News Report
The Singapore economy is projected to grow at a slower pace in 2025, with GDP expected to rise by 1–3%, down from 4.0% growth in 2024. Challenges include protectionist policies under the new Trump administration, anticipated slower growth among key trading partners, and the potential escalation of geopolitical tensions. Despite these concerns, growth momentum from the ongoing recovery in the manufacturing sector is expected to sustain into early 2025, while labour market conditions should remain stable.
Office Market
The office market has shown improvements in take-up and occupancy rates in Q4 2024, providing a positive outlook for 2025. However, challenges such as upcoming lease expiries and low precommitment levels for new office buildings remain a concern. As a result, while demand remains tentative, the combination of limited medium-term supply and a continued flight to quality should lead to moderate growth in Core CBD (Grade A) office rents in 2025. This is expected to be especially true for premium office spaces as companies look to upgrade their office environments.
Industrial & Logistics Market
In 2024, demand for industrial and logistics spaces was subdued due to cost pressures and disruptions in global supply chains triggered by the Red Sea crisis. However, growth is expected to return unevenly across different manufacturing clusters in 2025. With initiatives such as the JS-SEZ*, Singapore continues to attract sizeable investments, maintaining its position as a leader in advanced manufacturing. This continued investment, combined with strong regional demand, should support long-term growth in the industrial and logistics sectors.
Retail Market
Retail expansion is expected to remain strong in 2025, despite some challenges dampening demand in the short term. With a full recovery of tourism to pre-COVID levels on the horizon and supply expected to remain below historical averages, retail rents should stabilise. The retail sector is likely to benefit from a continued recovery in consumer spending and the strong demand for prime retail space, especially in high-traffic areas.
Residential Market
The residential market has seen a rebound in buying sentiment, driven by lower mortgage rates. Developers are expected to move forward with more launches in 2025. Despite this, rents are likely to remain under pressure in the short term due to affordability concerns and slower wage growth. However, the market is showing signs of stabilisation, with demand for both luxury and mid-range homes holding up relatively well.
Investment Outlook
Singapore continues to be one of the top three investment destinations in the Asia-Pacific region in 2025. Transaction volumes are expected to recover, supported by anticipated rate cuts. However, investors will be cautious and selective, focusing on sectors and strategies with more favourable outlooks. The uncertain economic and geopolitical environment is likely to lead investors to favour safer assets and high-quality properties. As such, commercial real estate, industrial facilities, and select residential developments in prime locations are expected to see strong demand.
*The Johor-Singapore Special Economic Zone (JS-SEZ) is a bilateral initiative to enhance trade, investment, and economic integration between Malaysia and Singapore. It features tax incentives, passport-free clearance, and streamlined business processes across nine flagship zones. Key sectors include finance, technology, healthcare, and manufacturing. Infrastructure projects like the Rapid Transit System (RTS) and digitalised cargo clearance aim to improve connectivity. By fostering cross-border collaboration, the JS-SEZ seeks to attract foreign investment, create jobs, and strengthen regional economic competitiveness.
