Here’s why Singapore real estate investment sales dropped in Q1

Investments fell 25% compared to the prior quarter.

After a robust year of real estate investment sales in 2024, a Savills report noted the market took a breather in the first quarter of 2025, with total investment value falling significantly to S$5.69 billion. This was 25.4% lower than the S$7.64 billion recorded in Q4 of the previous year.

“A closer look at the numbers reveals that the substantial decline in Q1/2025 was driven primarily by the private sector,” the report said.

Here’s more from Savills:

While the public sector experienced a 45.1% increase in transaction value, rising from S$1.93 billion in Q4/2024 to S$2.79 billion in Q1/2025, this was offset by the sharp 49.2% drop in the private sector, where sales plummeted from S$5.71 billion in Q4/2024 to just S$2.90 billion in Q1/2025.

The slowdown of investment activity in the private sector may be attributed to a combination of factors, including aggressive asking prices, fewer-than-expected Fed rate cuts, limited availability of investible-grade properties, and economic uncertainties arising from trade disruptions caused by President Trump’s tariff policies and ongoing geopolitical tensions.

Broken down by property type, the residential sector continued to take the lion’s share of Q1’s total investment value, with its proportion reversing the consecutive declines of the previous two quarters and bouncing back to 64.3%, totalling S$3.66 billion. This was mainly fuelled by five private residential land parcels awarded under the Government Land Sales (GLS) Programme, which collectively amounted to S$2.78 billion.

Although developers’ market confidence had recovered, supported by the healthy take-up rates seen in recent new launches, they continue to act prudently and selectively in land acquisitions due to rising development costs and economic uncertainty. Developers' top choice remains sites close to MRT stations or located in established estates.

This is evident from the tender for the first private housing GLS site in the upcoming Bayshore precinct, next to the Bayshore MRT Station, which drew eight bids. This was the highest number of bids received for a private residential GLS site since January 2022.

The commercial, hospitality, and industrial sectors accounted for 26.2%, 5.8% and 3.7% of the total investment value for Q1/2025, respectively, with a notable decrease in transaction volume. However, compared to the previous quarter, the commercial and hospitality sectors saw considerable increases of 54.2% and 26.5% in investment value, respectively, while the industrial sector posted a sharp decline of 90.3%.

The highest valued transaction involved the South Wing of Northpoint City in Yishun, a two-storey above ground and a two-basement level shopping mall with 301,579 sq ft of net lettable area (NLA). This property was acquired by Frasers Centrepoint Trust through the purchase of all units in North Gem Trust, a private trust that holds the interests in the property. 

The agreed value of Northpoint City South Wing was S$1,133.0 million, which equates to S$3,757 per sq ft of NLA. Based on the property’s net property income for the financial year ended 30 September 2024, the yield is 4.5%.