Knight Frank Commentary | URA Real Estate Stats - Q1 2026

Knight Frank Commentary | URA Real Estate Stats - Q1 2026

Residential

The URA All Residential Price Index increased by 0.9% q-o-q in Q1 2026, some 0.6 percentage points (pp) higher than the 0.3% q-o-q increase reported on 1 April 2026 when the flash estimates were announced. The brisk activity in Tampines in the second half of March 2026 with the 92.5% project sales at both Pinery Residences and Rivelle Tampines executive condominium (EC) contributed to the increase in the final index number. In the same manner, the non-landed index for the Outside Central Region (OCR) increased 2.2% q-o-q, 0.9 pp higher than the earlier flash estimates. In comparison, the Q1 2026 quarterly change reported today for the Core Central Region (CCR) at an increase of 0.6% q-o-q versus the 0.4% q-o-q gain (flash estimate), and Rest of Central Region (RCR) at an increase of 0.8% q-o-q versus the 0.9% q-o-q increment (flash estimate), were more in line with the earlier flash estimates.

Although the first three months of 2026 was partly affected by the lack of launches in February as a result of the Lunar New Year festive period, the brisk sales of OCR launches in Tampines showed that demand for new product by Singapore residents not only remains intact, but will likely continue to drive sales in Q2 2026. Projects such as Vela Bay at Bayshore Road and Tengah Garden Residences in Tengah will take the spotlight. The conflict in the Middle East does not appear to affect the buyers trawling newly opened showflats at the moment. As such, the price gap between new sales and resale transactions is expected to bifurcate further throughout the rest of 2026. Based on a quick scan of non-landed caveats (excluding executive condominiums) as of 24 April 2026, the median price for new sales is S$2,660 psf, 50.6% higher than that of resale transactions at S$1,766 psf in Q1 2026.

In the landed market, even though prices declined by a marginal 0.4% q-o-q, this was 1.4 pp higher than the earlier decrease of 1.8% reported at the flash estimates. The landed housing market remains supported by demand in tandem with the current lowered interest rate environment. This is likely to continue motivating buyers into a purchase decision in the coming months before interest rates could possibly start to creep up.

The URA rental index for private homes increased by a slight 0.3% q-o-q and a moderate 1.8% y-o-y, suggesting that there is balance of demand and supply making for a stable leasing market. Due to global uncertainty ratcheting up with the threat of escalating military conflict, landlords are wary and defensive, especially with job security becoming less uncertain for employees in industries that are affected by the rapid changes in the world. While higher cost-of-living concerns due to volatile energy prices also add to the worries of both landlords and tenants, Singapore’s current stability in an uncertain world should keep the leasing market steady, where rental increments are expected to be modest at around 1% to 3% for the whole year.

Momentum in the CCR is expected to continue through 2026 with a pipeline of project launches and sustained activity after a prolonged lull prior to 2025. Well-located projects have drawn solid interest from local buyers fuelled by wealth accumulated in the past two generations, and the view that prime properties remain sound long-term investments despite the Additional Buyer’s Stamp Duty (ABSD) on the ownership of multiple homes. As events in the Middle East continue to unfold, Singapore is well placed to benefit as a stable wealth and financial hub from global wealth flows. Some investors may recalibrate exposure away from conflict impacted markets and into Southeast Asia. However, the outcome of such inflows on prime homes are likely to be gradual rather than immediate.

For the rest of 2026, Singapore’s non-landed private residential market is expected to remain healthy despite the conflict in the Middle East. New home sales are likely to track between 8,000 to 10,000 units for the entire year. Nevertheless, higher energy prices and its knock-on effect on broad-based inflation can be expected to raise business costs and affect households. Should these shockwaves spread to the labour market and increase unemployment, homebuyer sentiment could turn pessimistic, eroding the current levels of supported demand.

Price growth is on track to increase by 3% to 5% in 2026, with the attention of most homebuyers concentrated on new launches. As buyers with means gravitate toward new product, the market is increasingly characterised by a widening gulf between new launch pricing and resale values. This divergence is likely to persist as more price-sensitive buyers turn to the resale market, reinforcing a two-tiered price dynamic across Singapore’s private housing landscape. The bifurcation of home prices between new product for sale at showflats against existing completed inventory will continue to prevail and even widen, with the premium for new homes pulling away from transacted resale averages (on a per-square-foot-basis).

Office

The office rental index declined by 0.2% q-o-q in Q1 2026, reversing the 0.4% q-o-q growth recorded in Q4 2025. With rents fairly stable, islandwide occupancy rose to 89.2% in Q1 2026, an increase of 0.3 percentage points (pp) from 88.9% in the preceding quarter. Landlords largely adopted a cautious stance in ongoing leasing activity, prioritising the maintenance of healthy occupancy levels. Against the tight occupancies and Knight Frank’s report of increasing rents in quality buildings, the slight dip in the office rental index suggest that certain older buildings could be coming under increasing rental pressure, especially when existing tenants are presented with more modern and well equipped options.

In March 2026, the sudden crisis in the Middle East shifted both landlords and occupiers to a more guarded posture. At the moment, the conflict has not yet materially influenced real estate strategies for most occupiers. At the same time, the situation has paradoxically reinforced Singapore’s safe-haven status, as multinational firms operating in affected regions may consider relocating to more stable environments, with Singapore positioned as a key base for Asia-Pacific operations.

The selective flight-to-quality trend continued to shape demand in Q1 2026. Occupiers remained drawn to newer Grade A offices in the CBD, driven by the need to balance prestige, accessibility, talent attraction and retention, alongside cost considerations. Consequently, early signs of vacancy pressures have begun to emerge in certain non-CBD office properties, as corporates in decentralised locations reassess opportunities to move into prime central developments vacated or downsized by other tenants.

Nevertheless, well-connected decentralised hubs such as Buona Vista and the Alexandra corridor continued to attract occupiers seeking more cost-effective alternatives without sacrificing islandwide connectivity. Within these locations, higher-specification buildings with superior amenities are expected to outperform, achieving stronger occupancy levels and retaining top-tier tenants more effectively than neighbouring properties. However, occupiers with aspirations for flight to quality may still be inclined towards the CBD. As a result, landlords in fringe and decentralised locations facing potential pressure are likely to focus on stabilising occupancy through flexible lease structures, selective provision of fitted-out spaces and targeted marketing to price-sensitive occupiers.

Overall, the Singapore office market is expected to remain stable in 2026, with full-year rental growth projected at 3% to 5%. Prime office assets should remain resilient, supported by limited new supply and the enduring appeal of the CBD. The key downside risk remains external, especially the possibility of a prolonged spike in energy prices, which could raise operating costs that may ultimately be passed on to tenants. Occupiers in energy-efficient buildings are therefore likely to be better insulated from such shocks. Even so, Singapore stands to benefit from its reputation as a neutral, reliable base for regional headquarters and strategic operations.

Retail

In Q1 2026, rents of retail space fell by a marginal 0.6% q-o-q, with the decline contributed by rental decreases in the Central Area and Fringe Area, with both contracting 0.2% q-o-q and 1.5% q-o-q respectively. The overall decline of rents in the retail space was after three quarters of rental expansion since Q2 2025. However, islandwide occupancy rate remained unchanged from the previous quarter, at 93.7% in Q1 2026.

The decline of retail rents could suggest that some landlords are recalibrating their expectations and becoming more attuned to the operating pressures faced by tenants. In response, some are taking a more proactive stance by engaging tenants directly, exploring how tenants might be better supported though mall coordinated promotional activities and marketing initiatives amid the prevailing uncertainty. This shared interest focuses on sustained occupancy against the alternative of pre-terminated leases and vacant spaces.

On a yearly basis, retail rents rose 1.8% in Q1 2026, easing marginally from the 1.9% y-o-y growth recorded in Q4 2025. This trajectory remains broadly aligned with prime retail spaces in malls. Based on Knight Frank’s prime retail basket, prime spaces at malls registered 3.0% y-o-y increase in Q1 2026. While prime mall spaces continue to track rental growth in spite of the challenges in the retail sector, other non-mall formats or secondary malls in less popular locations might be facing rental growth constraints.

While the direct impact of the Middle East conflict has not been immediately apparent for Singapore retailers, a prolonged crisis carries the risk of exerting extended upward pressure on utility and material costs. Beyond cost considerations, sustained geopolitical uncertainty also weighs on consumer confidence, with shoppers becoming more deliberate in their spending, increasingly inclined to pull back on discretionary purchases. Should the situation persist, retailers may find themselves contending with both a tightening cost base and a more cautious spending environment, compounding the pressures of an already demanding operating landscape.

The immediate knee-jerk reaction to the events unfolding in the Middle East would likely result in certain international and local brands delaying or reassessing new store rollouts, leading to longer leasing decision cycles despite underlying demand remaining intact for the moment. Foreign brands planning to expand out of their domestic markets using Singapore as a launchpad might grow cautious and reticent should the conflict remain unresolved.

Since the Middle East serves as a global transit hub and current disruptions are affecting travel flows between Europe and the Asia-Pacific region that typically transit through the Gulf hubs, a portion of long-haul European visitors to Singapore may reroute or cancel plans, introducing near-term friction to inbound tourism. Paradoxically, however, Singapore may capture diverted tourist demand as Chinese and Japanese visitors head to Singapore and South-East Asia with Middle East aviation corridors choked by the hostilities.

This can be a meaningful development for Orchard Road, and contribute to the 17 to 18 million tourists with S$31 to S$32.5 billion in receipts forecasted by the Singapore Tourism Board for 2026. Driven by new attractions despite the crisis-induced flight disruptions, Orchard Road retail could stand to benefit from inflows of high-net-worth individuals, boosting luxury retail turnover and flagship store demand. As such, Knight Frank maintains its forecast for its prime retail rents to grow between 2% and 4% in 2026.