Real Estate Investments 11 Q O Q 2Q2025 Amid Cautious Activity Knight Frank
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The real estate market in Singapore saw moderate activity in the second quarter of 2025, with the announcement of US tariffs and the ongoing Israel-Iran conflict causing volatility. According to research by Knight Frank, a total of $5.8 billion in investment sales were recorded in Q2, marking a slight increase of 1.1% from the previous quarter but a decline of 13.9% from the same period last year.
Despite this, Galven Tan, CEO of Knight Frank Singapore, remains optimistic about the underlying interest in Singapore’s real estate market. He notes that active capital continues to be interested in thematic sectors and with the decrease in the bid-ask gap, these sectors are likely to see more success.
The majority of investment sales in Q2 were driven by City Developments’ sale of its 50.1% stake in the office development South Beach to IOI Properties Group for $1.4 billion. This pushed private sales to $4.6 billion, making up 79.2% of overall investment sales.
On a different note, residential sales during this period saw a significant decline of 52.3% quarter-on-quarter and 57% year-on-year to $1.8 billion. The majority of these sales came from the award of two Government Land Sale (GLS) sites, Lentor Gardens and Lakeside Drive, for a collective $1 billion. The quarter also saw the first residential collective sale of the year, with the sale of River Valley Apartments for $56 million in February.
Commercial deals also contributed to the $1.8 billion private sales, with an increase of 17.8% quarter-on-quarter due to the South Beach transaction. However, compared to the same period last year, this figure decreased by 10.5%.
In contrast, industrial activity picked up significantly in Q2 with investment sales reaching $1.6 billion, an increase of 560% quarter-on-quarter and 311% year-on-year. Notable industrial deals that closed in May include the sale of 9 Tai Seng Drive for $455.2 million, The Strategy business park in Jurong for $280 million, and 5 Science Park Drive for $245 million. Additionally, two collective sales in the industrial market were successful during this period, with Ching Shine Industrial Building selling for $113.2 million and MacPherson Industrial Complex for $103.9 million.
Hospitality asset sales also saw a boost in Q2, climbing 284% quarter-on-quarter to $585.8 million. This was largely driven by the sale of Citadines Raffles Place for $280 million by CapitaLand Integrated Commercial Trust, CapitaLand Development, and Mitsubishi Estate Asia. Two other notable hotels, 21 Carpenter and Momentus Serviced Residences Novena, were also sold for $100 million each.
Looking ahead, Knight Frank expects sales activity to remain cautious and selective in the second half of the year. However, the launch of ten new GLS sites in the 2H2025 program is expected to support sales. Tan adds that these sites are in desirable locations and most have a potential of less than 600 new homes, which aligns with the preferences of developers.
Despite the current market climate, Knight Frank maintains its investment sales forecast of between $27 billion and $30 billion for the full year.