Singapore property market steady in Q2 with cautious outlook

Realion forecasts that full-year investment sales could still reach between $20b and $25b.

Singapore’s property market held steady in the second quarter of 2025, but the outlook across sectors reflects a cautiously optimistic tone, with interest rates, supply constraints, and shifting demand patterns shaping expectations for the rest of the year.

According to the ETC Singapore Digest 2Q 2025 by Realion Research, overall market momentum is restrained by external uncertainties, but select segments are poised for moderate gains.

In the investment market, total sales reached $5.5b in Q2 2025, down slightly from the previous quarter. The decline was attributed to a continued mismatch between buyer and seller expectations.

Despite subdued volumes, Realion forecasts that full-year investment sales could still reach between $20b and $25b, provided interest rates ease further and price gaps narrow. Investor appetite is expected to return gradually as macroeconomic conditions stabilise.

The office sector showed signs of resilience, with island-wide occupancy improving to 95.0% and stable rental performance in the CBD. Grade A spaces remained in demand, particularly in prime areas like Marina Bay and Raffles Place.

However, a rise in shadow space—up 12.5% QoQ—signals that some tenants are reassessing space needs. With a limited supply pipeline through 2027, Realion expects modest rental growth in premium locations, though overall demand may remain cautious in the near term.

In the industrial market, prices climbed 1.4% QoQ, driven by multiple-user factories. Net absorption was strong at approximately 3.1 million sq. ft., even as overall occupancy slipped slightly to 88.8% due to new completions.

Realion warned that the upcoming 3.0 million sq. Ft. of industrial supply expected in the second half of 2025 could put downward pressure on rents, especially if global trade uncertainties persist after the end of the tariff pause in August.

The retail sector remained stable, buoyed by 4.0 million international visitors during the quarter. Rents increased modestly across all segments, led by Orchard/Scotts Road. However, island-wide occupancy dipped slightly to 92.9%, with the decline concentrated in fringe and other city areas.

Looking ahead, Realion expects retail rents to rise modestly, supported by limited near-term supply and tourism recovery. Still, cost pressures, regulatory changes, and evolving consumer behavior may prompt tenants to focus on relocating rather than expanding.

Private residential prices rose by 1.0% in Q2 2025, driven mainly by gains in the landed segment and the Core Central Region. However, transaction volumes dropped sharply by 29.4% due to a slowdown in new launches.

Whilst the rental market remained stable, the primary market softened as developers held back during the June holiday period. For the rest of the year, Realion projects home prices to increase by 3% to 5%, with 21,000 to 24,000 units likely to be transacted.

Interest rate declines are expected to support buying interest, though price sensitivity and geopolitical uncertainty may temper demand.