Creating Resilience – Moderate Growth Expected in Singapore Commercial Real Estate Despite Headwinds

January 31, 2024

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Melvin Lin

Head of Marketing & Communications, Singapore

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Singapore, 31 January 2024 – An expected easing of inflation rates, accompanied by a gradual decline in interest rates in the second half of 2024, could fuel a cautious optimism amongst investors in Singapore real estate. This, among other projections relating to several real estate sectors, was presented in CBRE’s 2024 Singapore Real Estate Market Outlook report.

Moray Armstrong, Managing Director of Singapore Advisory Services at CBRE, introduced the report, saying, “While Singapore avoided recession in 2023, many investors remain cautious due to continued economic headwinds and relatively weak growth across a number of sectors. External geopolitical tensions add to the climate of uncertainty across trading partners including China, the US, and Europe. From interactions with clients and partners, however, we have observed improved optimism on the prospects for the second half of the year when underlying inflation and interest rates are expected to ease from their current highs. Improving economic growth complemented by sustained recovery in travel and tourism should aid the real estate sector.”

Tricia Song (宋明蔚), CBRE Head of Research, Singapore and Southeast Asia, observed, “Across many sectors, we are noticing similar trends of tightening new supply and healthy levels of demand persisting. Therefore, while caution might dampen growth rates, we still expect to see some moderate growth in prices and rentals across the board.”
“Singapore remains one of the most attractive investment destinations in the world given its exceptionally strong fundamentals and sustainable long-term prospects. I am confident that for investors looking to improve the quality of their portfolios, it is a matter of “when” and not “if” picking up Singapore assets is high on the agenda”, Moray added.

Sectoral Highlights – Singapore Real Estate Market Outlook 2024:

Flight-to-quality to offer support for Office rentals in Core CBD (Grade A)

• CBRE Research expects Core CBD (Grade A) rents to grow at a moderate pace of 2% to 3% in 2024, slightly up from the 1.7% increase recorded in 2023. This will be fuelled by a noticeable preference for buildings in the city centre with good connectivity, high-quality specifications, and sustainability credentials. Many organisations consider offering workplaces with these features to be part of their talent attraction and retention proposition.
• Layoffs in the tech sector, coupled with economic uncertainty, could however dampen demand. The effects of these should however be neutralised by resilient demand from the consumer products, private wealth and asset management, legal and insurance, and flexible workspace sectors, as well as government agencies.
• New supply entering the market in the form of IOI Central Boulevard Towers, Labrador Tower, and Paya Lebar Green in 2024 should offer some relief to the upward rental pressures. However, with at least 40% of the spaces already pre-committed and a foreseeable fall in supply over three years (2024 to 2026) of 1.19 million sq. ft. per annum (3.5% lower than the 10-year historical average), this might only represent a temporary relief until all of this supply injection is absorbed.

In Industrial & Logistics, manufacturing upturn and prime logistics sustained demand and limited supply to offer support
• In the 2023 Asia Pacific Logistics Occupier Survey, over 70% of respondents cited elevated costs and economic uncertainty as the top risks to their business in the next three years.
• With greater emphasis on operational efficiency, occupiers are recalibrating expansion plans and exercising discipline and caution in space acquisition. In 2023, CBRE Research observed some occupiers consolidating their real estate footprint by relocating to smaller, modern hi-tech industrial facilities with improved specifications.
• Leasing demand was anchored mostly by e-commerce and logistics, reflecting an ongoing trend of outsourcing logistics to 3PL companies to enjoy cost savings, as well as retailers adopting omnichannel strategies. 2024 might see more diversified demand, with companies in life sciences and technology becoming more active in leasing to meet manufacturing requirements.
• Over the next three years (2024 – 2026), new warehouse supply is estimated at 2.19 million sq. ft. per annum - 47% lower than the 10-year historical average net supply of 4.13 million sq. ft. per annum. Although competition for space in modern logistics properties continue to persist, prime logistics rental growth is expected to moderate to 6% in 2024.

Retail sector likely to eke out modest growth
• In the December 2023 CBRE Asia Pacific Leasing Sentiment Index, 82% of respondents indicated an appetite for more space – an increase from 62% in the prior year.
• In Singapore, the growth in retailers’ expansionary demand could be checked by some headwinds, for example, inflation and the increase in GST, an uncertain economic outlook resulting in consumers spending more conservatively, higher operating costs arising from rising utilities bills, staffing challenges, and supply chain risks.
• However, other factors could outweigh the above challenges to fuel a modest growth in demand, leading to a commensurate rise in rentals. These include an expected recovery in tourism, continued momentum towards returning to the office, as well as a calendar filled with MICE events including concerts, performances, and conferences.
• Further supporting the prospect of a modest growth in rental would be a supply crunch over the coming few years. 0.66 million sq. ft. of new retail space is expected to be completed in 2024, representing a 15.1% reduction y-o-y. Completions are expected to taper further in the subsequent two years, bringing the annual average more than 60% below the 10-year historical average of 1.09 million sq. ft. per annum.
• Considering the above, CBRE Research expects overall retail rents to grow 3% to 4% in 2024, with spaces in locations with high tourist traffic likely to outperform those in the suburban areas.

Residential sector to see growth in prices and rentals moderate further
• New home sales in 2023 hit a 15-year low of 6,421 units – a 9.6% reduction y-o-y. This was the result of a combination of cooling measures, economic challenges, and high interest rates. As these conditions are expected to persist into H1 2024, buying sentiment might only begin to recover in H2.
• Foreign demand should likely also remain muted, given the prohibitive ABSD rate of 60%. While foreign buyers accounted for as high as 8.3% of transactions before the ABSD was increased in April 2023, the proportion promptly fell following the change, going as low as 1.6% recorded in December 2023.
• 2023 saw a spike in completions amounting to 19,968 new units. While new supply is expected to taper to 9,636 in 2024 and 5,492 in 2025, rental growth is expected to ease in the near term as the market digests peak completion. Barring a significant pullback in demand, islandwide home rentals could increase by 1% to 3% in 2024.
• CBRE Research estimates 9,000 to 12,000 new units could be launched in 2024, and 7,000 to 8,000 units to be sold through the year. This should represent an uptick from the 6,421 in 2023, but still below the 5-year average of 9,288 units. Prices should moderate further to rise 3% to 4%, but a significant correction is unlikely considering low unemployment rates, healthy household balance sheets, and low unsold inventory.

Singapore remains an attractive investment destination, with recovery expected in H2 2024
• 2023 witnessed a stalemate between buyers and sellers arising from mismatched price expectations. This led to real estate investment volumes declining 29% y-o-y to S$28.844 billion. It is foreseeable that the same conditions should spill into H1 2024.
• A significant recovery could however play out in the latter half of 2024 if interest rates fall and stabilize at levels that offer investors confidence of positive carries in their acquisitions. CBRE’s 2024 Asia Pacific Investor Intentions Survey found that majority of investors who transact in Singapore expect to purchase similar volumes or even more real estate in 2024, compared with 2023. This suggests there is ample liquidity waiting on the sidelines.
• Singapore also remains an attractive destination for cross-border investments. Its macro-economic stability, pro-business environment, and neutral political environment instil confidence in investors.
• Given sound fundamentals and expected continuation of rental growth, CBRE Research expects full year property investment sales volumes could rise 15% above 2023 levels including planned public land sales.

Click here to download the full Singapore Real Estate Market Outlook 2024 report.

About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2023 revenue). The company has more than 130,000 employees (including Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at