-- Office
According to URA, office market indicators delivered a mixed performance in Q1 2026, with URA statistics pointing to a mild softening even as prime Grade A indicators continued their upward trajectory. The URA Office Rental Index for the Central Region recorded a marginal decline of 0.2% in Q1 2026, following a recovery of 0.4% q-o-q in Q4 2025.
Since Q4 2025, URA no longer provides the tabular breakdown of office data in their press release. CBRE manually goes into the data dashboard to download latest and past quarterly data.
- A closer examination of URA transaction data for Category 1 office space revealed that the headline softening was driven predominantly by the 200-500 sq. m. floor area band, where median rents fell 9.2% q-o-q – likely reflecting softness in selected Category 1 buildings rather than a broad weakening of prime market fundamentals.
- In contrast, large format floor plates (the >1,000 sq. m. band) – the best proxy for prime Grade A space, gained 2.3% q-o-q, consistent with the broad-based firming seen in CBRE’s Core CBD Grade A data and underscoring the structural demand for larger, contiguous prime floor plates. Reflecting this trend, CBRE’s Core CBD Grade A rents rose 0.8% q-o-q to $12.40 psf/mth – the fifth consecutive quarter of growth – and Core CBD (Grade A) vacancy compressed to a low of 3.3%, reinforcing increasingly landlord-favourable conditions for prime space.
Table 1: Median rentals for Category 1 office space ($psf/mth)
Note: Refers to office space in buildings located in core business areas in Downtown Core and Orchard Planning Area which are relatively modern or recently refurbished, command relatively high rentals and have large floor plate size and gross floor area.
Source: URA (https://eservice.ura.gov.sg/property-market-information/pmiCommercialRentalOfficeAnalysis)
There were no significant completions this quarter, preserving the tight supply demand balance. According to URA data, islandwide net absorption increased by 0.28 mil sq. ft. in Q1 2026, reflecting sustained occupier activity across the island. Islandwide vacancy continued its downward trend, falling from 11.7% in Q1 2025 to 11.1% by Q4 2025 and 10.8% in Q1 2026.
CBRE data corroborates this trend. According to CBRE data, net absorption for Core CBD (Grade A) space was robust at 0.2 million sq. ft. in Q1 2026, as occupiers continued to prioritise prime, well-located, and ESG-compliant premises during relocations, with some securing additional space for future headcount growth.
Flight-to-quality momentum was evident across key Core CBD developments. IOI Central Boulevard Towers, Marina One, and Marina Bay Financial Centre (MBFC) remained focal points of active leasing activity, with demand anchored by tenants seeking large, contiguous floor plates of international specification.
Active demand in Q1 2026 was broad-based, with financial services — spanning commercial banking, wealth management, asset management, and quantitative trading — remaining a key source of leasing activity. AI companies are increasingly graduating from coworking arrangements into dedicated, self-managed offices, while coworking operators continued to expand to serve start-ups and international occupiers establishing a Singapore footprint.
Outlook
The Singapore office market is expected to remain landlord-favourable through 2026, supported by the combination of robust occupier demand, a thin near-term supply pipeline, and record-low Grade A vacancy. Large contiguous floor plates exceeding 20,000 sq. ft. are expected to remain scarce, with pre-commitment activity already registered for developments slated for completion as far out as 2029, underscoring the depth of forward-looking demand. Shaw Tower stands as the only major office completion scheduled for 2026, meaning the supply pipeline remains thin and unlikely to materially disrupt the current market equilibrium.
While global trade tensions, geopolitical uncertainty, and macroeconomic headwinds present downside risks, Singapore's structural advantages — including its role as a regional headquarter hub, its strong regulatory framework, and its historically resilient post-correction recovery profile — underpin our positive outlook.
CBRE Research maintains its forecast for Core CBD (Grade A) rental growth of approximately 5% y-o-y for full-year 2026, reflecting confidence in the durability of the current upcycle.
Retail
Retail sales (excluding motor vehicles) fell 2.6% y-o-y in Jan 2026 but rebounded by 12.1% y-o-y in Feb 2026, largely reflecting differences in the timing of Chinese New Year. Similarly, tourism arrivals showed an 8.1% y-o-y dip in Jan but rose 9.0% y-o-y in Feb, driven by a surge in visitors from China that reached an all-time monthly high. Supported by a 10.1% y o y rise in Mar, Q1 2026 visitor arrivals increased by 2.8% y o y.
URA’s Q1 2026 data showed that rents of retail space in the Central Region declined by 0.6% q-o-q, reversing the past three quarters of increases. On the other hand, CBRE Research’s data showed that islandwide prime floor rents increased by 0.5% q-o-q in Q1 2026, at the same pace as the previous quarter. CBRE Research posits that the retail market remains bifurcated, characterised by robust demand for prime floors and comparatively subdued interest in secondary corridors.
Despite continued headlines around store closures (including The Providore, T2 Tea, Pull & Bear, and Nanyang Optical), leasing momentum remained strong in Q1 2026. According to URA data, the quarter saw positive net absorption of 8,000 sq. m. (about 86,000 sq. ft.) in the islandwide private retail market, extending the positive net absorption of 34,000 sq. m. (about 366,000 sq. ft.) in Q4 2025. However, the influx of new supply resulted in islandwide private retail vacancy rates remaining flat q-o-q at 6.4%.
- CBRE Research noted that space take-up was led primarily by F&B such as Tutto, Jumboree, and Molly Tea. Leasing demand was also supported by fashion brands, including Jil Sander and Barehands, as well as lifestyle concepts—most notably art galleries that opened in conjunction with Singapore Art Week, such as Project Art Hunter and Kwai Fung Hin.
Performance was mixed across submarkets in Q1 2026. The Downtown Core, Orchard and fringe submarkets registered negative net absorption, while the rest of central and the outside central region (OCR) submarkets posted positive net absorption. The OCR area continued to outperform, recording the highest net absorption of 13,000 sq. m. (about 140,000 sq. ft.), extending the positive net absorption of 19,000 sq. m. (about 205,000 sq. ft.) in the previous quarter. As a result, vacancy rates in the OCR submarket tightened from 4.4% in Q4 2025 to 4.1% in the quarter.
Conversely, the Orchard submarket continued to underperform, which could be attributed to numerous store closures in the area, including Itacho Sushi, Lady M, and Royal Secrets Wellness. The submarket saw negative net absorption of 4,000 sq. m. (about 43,000 sq. ft.), extending the negative net absorption of 5,000 sq. m. (about 54,000 sq. ft.) in the previous quarter. This contributed to an increase in vacancy rates from 6.6% in Q4 2025 to 7.1% in Q1 2026.
Outlook
Retailers remain challenged by manpower shortages, rising operating costs intensified by the ongoing Middle East conflict, and heightened competition from e commerce. While tourism spending is expected to be bolstered by a strong pipeline of MICE events and concerts, this could be partially offset by airline capacity reductions amid elevated fuel costs. Nevertheless, resilient consumer spending, coupled with Singapore’s safe haven status, should support continued demand for prime retail space. CBRE Research views that with new supply over the next three years set to remain below historical averages, prime retail rents could grow by 1 – 2% in 2026.
Residential
In Q1 2025, private housing prices rose 0.9% q-o-q. This was much faster than initial flash estimate of 0.3% q-o-q and accelerating from the 0.6% q-o-q increase in Q4 2025. This points to an acceleration in prices in the last two to three weeks in March, a surprise given the negative backdrop of the Middle East conflict, and likely due to effects of the strong 93% first-day take-up of Pinery Residences and Rivelle EC in Tampines West at vicinity-record prices in late March.
The overall private residential price increase of 0.9% q-o-q in Q1 2026 was driven by the non-landed segment which rose 1.3% q-o-q, partially offset by the landed segment which dipped 0.4%. The non-landed segment turned around from 0.2% decline in Q4 2025, led by the OCR’s acceleration to +2.2% q-o-q, from +1.0% in Q4 2025, and the CCR’s turnaround from -3.5% in Q4 2025 to +0.6% in Q1 2026. Even the RCR also gained a bit more momentum to +0.8%, after rising 0.7% in Q4 2025.
The rental index of private residential properties also improved, after dipping 0.5% in Q4 2025, rising 0.3% q-o-q. To recap, rents were up 1.9% in 2025, retracing the 1.9% correction in 2024 and are mostly flat from end-2023 levels.
The rent increase of 0.3% q-o-q in Q1 2026 was driven by non-landed segment which rose 0.4% q-o-q, while landed properties rose 0.1%. The non-landed segment turned around from 0.1% decline in Q4 2025, led by the OCR’s turnaround of +1.0% q-o-q, from -2.0% in Q4 2025. The RCR dipped 0.2% after rising 0.6% in Q4 2025, while the CCR’s Q1 2026 rent growth tapered to 0.5% from 0.7% in Q4 2025.
Overall private residential occupancy rates deteriorated in Q1 2026 despite fewer completions – 911 units (ex-ECs) completed in Q1 2026 vs 2,018 units in Q4 and 1,776 units in Q3 2025. The stock of occupied private residential units (ex-ECs) increased by 225 units, compared to 5,027 units in Q4 2025 and 2,640 units in Q3 2025. Only the CCR saw occupancy rate improve. Vacancy rates of completed private residential properties in the CCR, RCR and OCR were 8.2%, 6.3% and 5.2% respectively, compared with the 8.8%, 6.0% and 4.9% in the previous quarter.
Developers sold 2,013 new private homes (ex ECs) in Q1 2026, easing 31.5% from the 2,940 units sold in Q4 2025, and 40.4% y-o-y from 3,375 units in Q1 2025. The lower comparative was due to the high base in 2025 which saw bumper new launches capturing latent demand amid sharp falls in mortgage rates. Homebuying appetite has remained surprisingly strong in March despite heightened volatility and economic uncertainty from the Middle East conflict which started on 28 Feb, probably as mortgage rates are still at its lowest levels since 2022 and any effects from the energy crisis have yet filtered into the wider economy.
Outlook
Looking ahead, sales momentum could hold firm given strong interest in upcoming OCR launches such as Vela Bay (515 units) in the Bayshore district and Tengah Garden Residence (863 units) in Tengah. Both projects are well-located near existing or future MRT stations in precincts earmarked for transformation by the URA and could see healthy interest from upgraders and first timers who believe in the growth potential of the areas.
While homebuying sentiment and appetite has been resilient so far amid low mortgage rates and steady household income growth, a protracted Middle East conflict may increase caution among homebuyers, who could become more discerning in their purchase decisions especially given inflationary pressures from higher fuel and food prices. Competitive and realistic developer pricing will be critical.
Barring major economic shocks, CBRE Research projects that 7,500 – 8,500 new homes will be sold in 2026 given a decent pipeline of attractive new launches, healthy household balance sheets and low mortgage rates. This represents a moderation after above-trend sales of 10,815 units in 2025 and is slightly below the 5-year average (2021 – 2025) of 8,766 units.
Correspondingly, private home prices, which rose 0.9% in Q1 2026 and have cumulatively risen 43.5% since the Covid trough in Q1 2020, are likely to grow at a stable pace in 2026. CBRE Research forecasts a price growth of 2 – 4%.
Read URA's press release here: https://www.ura.gov.sg/Corporate/Media-Room/Media-Releases/pr26-31.
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 and a premier provider of critical infrastructure services. The company has more than 155,000 employees serving clients in more than 100 countries. CBRE serves clients through four business segments: Advisory (leasing, sales, debt origination, mortgage servicing, valuations); Building Operations & Experience (facilities management, property management, flex space & experience, critical infrastructure); Project Management (program management, project management, cost consulting); Real Estate Investments (investment management, development). Please visit our website at www.cbre.com.
Release ID: 89189964
Google
RSS