Colliers forecasts slight compression in Singapore's cap rates

Over the past three years, cap rates have remained relatively stable.

Prime cap rates in Singapore may compress slightly when interest rates decrease in the second half of the year, Colliers reported.

Colliers attributed this possibility to the “substantial amount of capital waiting to be deployed.”

Overall, Colliers said cap rates for prime office, retail and industrial assets will likely stay “relatively stable in the near future, with a slight inclination for them to move downward.”

In the past three years, Singapore’s prime office, retail and industrial cap rates have remained relatively stable despite 11 rate hikes from the US Federal Reserve from 17 March 2022 to 27 July 2023, with rates ranging from 5.25% to 5.50%.

Colliers said Singapore’s fiscal measures implemented during the pandemic, including five budgets in 2020 and close to $100b relief, helped stabilize cap rates in the country.

“The stable economy and liquidity in Singapore has given investors confidence to continue supporting the real estate market,” Colliers said,

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