After years of dormancy, the property market of Singapore has become very popular among investors. This January, Singapore‘s real estate stocks have been the most active since early in the 2000s, spurred by lower borrowing costs, strengthening housing sales, and increasing expectations for capital profitability and income from developers and Real Estate Investment Trusts (REITs).
One of the main signs that this trend will continue is the availability of statistical data to support it. Based on Bloomberg data, the FTSE Singapore Real Estate Investment and Service Index (FTSE ST All-Share) has experienced nearly a 14% gain through today, making it the highest gain of the index at January’s close on record (July 2012). In addition, this year’s increase has averaged approximately 10% greater than the overall Bloomberg Asia Real Estate Stocks Index, meaning that there is a greater emphasis on investing in Singapore-listed companies compared to other Asian companies.
What is triggering this surge in activity? Much of it has to do with the numbers as a result of policies adopted worldwide to help economies recover (i.e., the declining monetary easing) and to bring interest rates down, thus providing an opportunity for investors to invest in such yield-dependent types of publicly traded stocks such as property stocks and real estate investment trusts (REITs). In addition, as we see a return to the housing market locally—where activity relating to both private sales of homes and developments has been stagnant for such an extended period of time—analysts are starting to feel more confident that there will be more steady cash flows to these companies, but more importantly, there will be an increase in more shareholder-friendly activities such as share buybacks or special distributions to shareholders. A majority of the broker notes (most of which originate from OCBC) indicate that there are several companies recycling their capital and cleaning up their balance sheets, which further provides support for the re-rating of these companies.
Furthermore, the optimism expressed in the above bullet has been supported by actual concrete examples of transactions. The most recent land tender process carried out by the government, along with recent high-value contract awards, indicates that developers continue to show an ability to deploy capital. As an example, a consortium led by UOL Group was recently awarded a S$1.5 billion integrated development site tender which will consist of a mix of residential and commercial uses along with new transport links; the award further confirms that institutional investors will continue to support urban redevelopment projects in Singapore. Such transactions contribute towards the ongoing narrative that many developers have a number of existing development assets which can potentially be monetised or converted for use as market conditions become more favourable.
REITs are also starting to see improvements after many months of increasing interest rates and reduced access to credit. As interest rates decrease and the returns on REITs become more consistent with the longer-term financial performance of S-REITs, analysts expect that more institutional investors will begin paying attention to the S-REIT sector.
For those seeking a steady stream of income from their investments, a consistent return will mean that REITs will increasingly look favourable to people looking for long-term yields rather than just speculative investments.
However, caution surrounds this opportunity. Most of the gains that the market has achieved were concentrated on mid- and small-cap companies; thus, the performance of mid- and small-cap companies needs to continue, or it will represent a significant risk of underperformance. Many other risks remain, including the potential for mid- and small-cap companies to underperform due to policy missteps in Singapore or the possibility of renewed volatility in global interest rate markets. Therefore, an unexpected surprise due to inflation or geopolitics could quickly derail investor sentiment.
Despite these challenges, the economic climate remains enticing. The Straits Times Index gained approximately 23% in 2025, registering one of its biggest yearly increases in a while. As such, the cyclical recovery will likely make its way into property, as many companies are reshaping their balance sheets through capital recycling, portfolio rebalancing and selective asset disposals. If the earnings season confirms what managements are saying about returning cash to shareholders and accelerating asset sales, then the rally could also expand to a much broader range of companies than just a select few.
For the moment, Singapore’s property sector is starting to be treated as a “new story” again, as the valuation of previously held property will change as it is reassessed, and with interest rates seemingly on the rise, the property developers and REITs may find themselves in the middle of a real market revival, provided data and political policies are favorable to this sector.
