Singapore continues to prove why it remains one of the most compelling destinations for international businesses and investors. According to Cushman & Wakefield’s Singapore Market Outlook H2 2025, the city-state’s property and commercial markets are demonstrating remarkable resilience, even as global uncertainty weighs on sentiment. For Italian SMEs looking to invest in Singapore, the fundamentals have rarely been more encouraging.
A Stable Economy in a Turbulent World
Singapore’s economic growth forecast has been revised to approximately 1.8% for 2025, but a recession is not expected. Key indicators remain healthy: unemployment is forecast to stay low, retail sales are projected to see moderate growth, and interest rates have been on a consistent downtrend.
Moreover, Singapore’s neutral geopolitical stance continues to attract businesses seeking stability. While global trade tensions have de-escalated considerably — with US-China tariffs significantly reduced as of mid-2025 — Singapore’s expected relatively low US tariff rate of just 10% and its neutral positioning may attract high-end manufacturers and investors seeking long-term stability.
Furthermore, the anticipated tariff differential between China and Southeast Asia continues to support a “China+1” diversification strategy, with Singapore standing out as a primary beneficiary.
Office Market: Tightening Supply Drives Rents Higher
For companies seeking to establish or expand their Singapore presence, the office market tells a clear story. CBD Grade A office vacancy rose to 5.2% in Q2 2025, partly driven by the completion of Keppel South Central. However, excluding that new development, vacancy would fall to just 3.9%.
Additionally, the supply pipeline is exceptionally thin. Islandwide new office supply is projected to average just 0.5 million square feet annually in 2026 and 2027 — less than half of the historical net demand. As a result, businesses with significant space requirements are advised to plan well ahead.
CBD Grade A office rents rose 1.2% in H1 2025, and forecasts point to growth of 4.0–5.0% in 2026, making early entry into the market a strategically sound decision for incoming companies.
Industrial and Logistics: Opportunity Amid Transformation
Singapore’s industrial sector offers compelling opportunities for businesses in manufacturing, logistics, and technology. Singapore’s Purchasing Managers’ Index (PMI) returned to expansionary territory at 50 in June 2025, following two consecutive months of contraction — a sign of recovering manufacturing momentum.
Multi-user factory supply in 2025 remains limited, below its ten-year average, which continues to support rental rates. Prime logistics spaces are seeing steady take-up rates despite current uncertainty.
Indeed, rising rents have unveiled pockets of opportunity for redevelopment, particularly for sites suitable for data centres, prime logistics, self-storage, and worker dormitories — all sectors with robust demand-supply dynamics.
Capital Markets: Investor Confidence on the Rise
Investment activity in Singapore is accelerating. Total investment volumes rose by 28.1% year-on-year to S$13.5 billion in H1 2025, compared to S$10.6 billion in H1 2024.
Singapore assets remain attractive to investors due to their stable cashflows and valuations. Furthermore, rising replacement costs are prompting developers to consider existing sites with repositioning potential.
Consequently, institutional investors — including major global funds — continue to target Singapore commercial, industrial, and hospitality assets. Notable H1 2025 transactions included the S$1.38 billion acquisition of a 50.1% stake in South Beach by IOI Properties Group, and a S$700 million industrial portfolio deal involving CapitaLand Ascendas REIT.
Retail Sector: Resilience Underpinned by Limited Supply
Singapore’s retail market continues to demonstrate stability. Physical stores continue to account for the bulk of retail sales, with online sales holding steady at around 14–15% of the total market. Net formation of retail trade entities remained positive as of May 2025, suggesting continued demand from retailers to set up shop in Singapore.
Moreover, the pipeline for sizable retail projects over 100,000 square feet remains limited until 2028, meaning that existing prime locations continue to command strong interest and rental premiums.
Why Italian SMEs Should Invest in Singapore Now
The convergence of tightening supply, falling interest rates, robust capital flows, and Singapore’s status as Southeast Asia’s premier gateway creates a window of opportunity that forward-looking Italian businesses should not ignore. Whether you are considering company formation, regional headquarters, or physical operations, the conditions to invest in Singapore are aligned in your favour.
Nevertheless, navigating Singapore’s regulatory environment, corporate structures, and real estate landscape requires expert local guidance. At Kelmer Group, we support Italian SMEs through every stage of their Singapore expansion — from company incorporation and tax advisory to finding the right operational base.