Singapore Property Sentiment Turns Cautious as Inflation Worries Resurface

Singapore's real estate industry has entered a more guarded phase. The latest quarterly sentiment survey conducted by the National University of Singapore's Real Estate department shows executives turning markedly more pessimistic in the first quarter, citing renewed inflation fears and a broader sense that the commercial cycle has lost momentum. For foreign residents weighing whether to buy, lease or hold, the survey offers a useful internal-industry reading of where the market is heading over the next six to twelve months.

The poll, which canvasses senior developers, consultants, fund managers and financiers, registered a clear drop in the current sentiment index and an even sharper fall in the future sentiment index. Inflation, financing costs and global demand uncertainty were named as the dominant downside risks. Respondents are no longer pricing in the soft-landing narrative that prevailed through much of last year, and several segments that had carried the market, in particular prime office and suburban retail, are showing signs of plateauing rather than re-accelerating.

Within that cooler mood, the residential sector stands out as a rare positive. Executives surveyed continue to see private homes as relatively resilient, supported by limited unsold inventory in new launches, a steady stream of HDB upgraders, and the structural draw of Singapore as a wealth-preservation base for regional and global capital. For foreign buyers, who pay 60 per cent Additional Buyer's Stamp Duty on residential purchases, the relevant signal is not price direction in isolation but the persistence of underlying demand even at punitive entry costs.

The contrast with commercial real estate is instructive. Office sentiment has cooled as occupiers remain disciplined on space, with hybrid work patterns now embedded and tenants opting for smaller, better-located footprints rather than expansion. Industrial and logistics, which had been a darling of the post-pandemic cycle, is normalising as e-commerce growth slows and rents in newer business parks meet resistance. Hospitality remains supported by tourist arrivals but executives flagged concern that room-rate growth has likely peaked for this cycle.

Inflation is the thread connecting these worries. The Monetary Authority of Singapore has kept policy relatively tight via the exchange rate mechanism, and core inflation, while moderating, remains above the long-run comfort zone. Construction costs have not retreated meaningfully, and developers report continued pressure from materials, labour and financing. For end buyers, this means new launch pricing is unlikely to fall sharply even if transaction volumes soften, because developers have limited room to discount without erasing margins on land bought at peak prices.

For foreign purchasers focused on the prime districts, the practical implication is selective patience rather than retreat. Districts 9, 10 and 11, along with Sentosa Cove, the only locale where foreigners can buy landed property, continue to see thin but steady transaction flow. Sellers in the Core Central Region have, in many cases, already adjusted expectations to reflect the reality of the ABSD regime. Buyers willing to engage seriously can find owners more open to negotiation than headline indices suggest, particularly for larger units where the buyer pool is structurally narrow.

The office market deserves a closer read for those with corporate or family-office interests in the city. Grade A rents in Raffles Place and Marina Bay have stabilised after a long run of growth, and landlords are offering longer rent-free periods to lock in covenant-strong tenants. New supply from upcoming central developments will test the market over the next two years. Executives polled expect a period of rent consolidation rather than a sharp correction, but the era of automatic annual uplifts is over.

What the NUS poll captures, in essence, is a market shifting from optimism to realism. The structural case for Singapore real estate, political stability, rule of law, currency strength, depth of capital, remains intact and is precisely why high-net-worth buyers continue to allocate here despite the friction costs. The cyclical case has weakened. For long-stay residents and foreign buyers, this combination tends to favour deliberate, well-researched moves on specific assets over broad market timing. The next two quarterly readings will indicate whether sentiment stabilises at the current cooler level or slips further as inflation data evolves.