GDP forecast raised to 1.5–2.5% on easing inflation, lower rates

Q2 2025 GDP growth at 4.4% YoY, with inflation at 0.8% and unemployment at 2.1%.

Singapore’s economy is now expected to grow 1.5–2.5% in 2025, up from a previous forecast of 0–2%, as lower interest rates and easing inflation lift business sentiment.

However, momentum may slow in the second half of the year as new US tariffs begin to impact global trade, according to a report from Cushman & Wakefield.

The report flagged strengthening macroeconomic indicators but warned of external risks. Singapore’s low exposure to US tariffs relative to other Asia-Pacific markets could provide some buffer, whilst improving financing conditions are expected to support occupier confidence and expansion plans.

Q2 2025 GDP growth at 4.4% YoY, with inflation at 0.8% and unemployment at 2.1%.

In the office sector, CBD Grade A rents rose 0.5% QoQ in Q3 to $11.13 psf/month, while vacancy tightened to 4.7%, down from 5.2% in Q2. Net absorption remained solid at 197,000 square feet, up from 185,000 sf the previous quarter.

Occupier behaviour continued to reflect cost caution, with many tenants opting for lease renewals over relocations.

Others chose short-term or fitted plug-and-play options, which often carry higher effective rents. C&W expects relocation activity to pick up over the next 12 months, driven by flight-to-quality and displacement from redevelopment.

Outside the core CBD, decentralised all-grade rents saw a modest 0.1% increase, while vacancy dropped to 5.3% from 7.2%. Cushman & Wakefield said rent growth in these areas could accelerate as space tightens.

Investment volumes picked up in Q3 with several large transactions, including the $1.045b sale of a 55% interest in CapitaSpring’s office and retail components, the $462m acquisition of the office component of Jem, and the $90m purchase of Lian Huat Building.

With low vacancy, a thin pipeline, and shadow space at multi-year lows, rents are expected to climb into 2026. C&W warned that occupiers seeking to upgrade may face limited options and higher costs, whilst decentralised submarkets could see faster rent growth as available space tightens.

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