Thought Leadership

KEY TAKEAWAYS

• Seasonal factors, including the year-end festive period and a slower inflow of expatriates and international students, contributed to a sharp 27.4% quarter-on-quarter decline in islandwide leasing contracts in Q4/2025. The pullback was broadbased across segments and regions.
• In tandem with the subdued leasing activity, islandwide rents for nonlanded private residential properties came under downward pressure, reflecting a sizeable stock of vacant leasable units.
• The modest year-on-year gains in 2025 provide a baseline for 2026. With new completions expected to remain steady at around 6,083 units—broadly in line with 2025’s relatively low supply—rents are likely to hold broadly firm in the first half of 2026, particularly if vacancy rates stay below 6.5%. Local and permanent resident demand for interim rental accommodation, mainly those awaiting completion of their private homes may help offset softer leasing demand from a lower inflow of expatriates. Overall, rents for non-landed private residential properties are forecast to remain broadly flat in 2026

KEY TAKEAWAYS

• Retail sales (excluding motor vehicles) rose in both October and November, while food and beverage (F&B) sales returned to growth in October.
• Although conditions improved in 2H/2025, softer demand in 1H/2025 weighed on overall performance, leaving islandwide retail vacancy broadly unchanged in Q4/2025.
• According to Savills’ basket of retail properties, average monthly rents in both the Orchard and Suburban areas registered modest year-on-year (YoY) growth.
• Supported by a tight supply pipeline and sustained tourism recovery, occupancy and rents—particularly in prime shopping districts—are expected to post modest gains of 1% to 2% this year. For the suburban malls, rents are still forecast to increase by the same amount as vacancies in prime malls remain low

KEY TAKEAWAYS

• Total leasing activity for factory and warehouse space increased modestly in 2025, with Savills’ basket of prime warehouse and logistics rents recording stronger growth. In contrast, rental growth for prime multiple-user factory space continued to moderate.
• Cautious investor sentiment persisted, weighing on strata industrial sales and leading to a decline in total industrial investment sales in 2025.
• Stronger demand for industrial assets with shorter remaining land tenures supported accelerated price growth for 30-year leasehold industrial properties within Savills’ basket. Conversely, price growth for freehold and 60-year leasehold industrial properties slowed.
• Rental growth in the business park segment strengthened slightly, while high-spec industrial space experienced subdued rental growth in 2025.
• Regional supply chains continue to be reshaped by recent US tariffs and by companies seeking cost advantages in neighbouring countries. Against this backdrop, rental growth for general warehousing space is expected to moderate in 2026, while rents for multiple-user factory space are projected to rise due to their cost-effectiveness.

KEY TAKEAWAYS

• Companies increasingly adopted a “flight-to-quality” approach to their office location strategy, and Grade AAA offices continued to be absorbed, supported by the tight pipeline of new top-tier space.
• According to Savills’ data, the vacancy rate for CBD Grade A offices fell by 0.3 of a percentage point (ppt) quarteron-quarter (QoQ) to 6.7% in Q4/2025. For the full year, vacancy declined by 1.3 ppts, reversing the 1.5 ppts increase recorded in 2024.
• With a limited pipeline of new office developments and low vacancies, average CBD Grade A office rents continued to rise for the seventh consecutive quarter by 0.3% QoQ to S$9.96 per sq ft in Q4/2025. For the whole of 2025, office rents rose by 1.8%, outpacing the 1.1% growth seen in 2024.
• For 2026 and 2027, Grade A CBD rents are expected to rise across the board. Grade A space will be dominated by large and financially strong companies and family offices while non-Grade A space would, over time, be either redeveloped or experience rising vacancy levels as their tenancy base consists of smaller subgroups of industries that face greater margin pressures. Our forecast for Grade A CBD office rent for 2026 remains at +2%.

KEY TAKEAWAYS

• Real estate investment sales in Singapore closed the final quarter of 2025 with total transactions amounting to S$10.97 billion. While this represented a 3.3% quarteron-quarter (QoQ) decline from the preceding quarter, activity levels were still resilient. It should be noted that the third quarter had a high base of S$11.35 billion.
• Investment activity from S-REITs, institutional investors, and high-networth individuals remained healthy, underpinned by lower financing costs and strong fundamentals across most property segments. In addition, the impact of US President Trump’s tariffs proved less severe than initially anticipated.
• The outlook for the investment sales market in 2026 is shaped by more than just the trajectory of interest rates. Fluid and volatile geopolitical developments are increasingly adding complexity to the picture. Given these conditions, we are maintaining our investment sales forecast for 2026 at approximately S$34 billion, in line with 2025 levels. Among physical assets, sectors likely to perform better this year include office, retail, and properties with redevelopment potential.