An index that tracks Singapore real estate leaders’ perceptions and expectations over a trailing six-month period plummeted into “pessimistic territory” in 1Q2026 as macroeconomic headwinds began to strain the industry.
The Current Sentiment Index, an indicator for the current overall market sentiment, fell to 4.9 in 1Q2026 from 6.1 in 4Q2025.
NUS Real Estate, which represents both NUS Institute of Real Estate and Urban Studies (IREUS) and the Department of Real Estate (DRE), conducts a structured quarterly survey to derive findings for the Real Estate Sentiment Index (RESI). RESI scores range from 0 to 10, reflecting the extent of pessimism or optimism among survey respondents, with 5.0 representing the neutral score.
The decline is mirrored across the index’s other indicators. The Future Sentiment Index, which tracks executives’ expectations for the next six months, slipped to 5.0 in 1Q2026 from 5.5 in 4Q2026, while the Composite Sentiment Index fell to 4.9 in 1Q2026 from 5.8 in 4Q2025, falling below the 5.0 threshold for the first time in recent quarters, says NUS Real Estate.
The ongoing crisis in the Middle East — with its cascading effects on surging energy costs, persistent inflation and elevated interest rates — has dampened property sentiment here in Singapore, says Qian Wenlan, director of the NUS Institute of Real Estate and Urban Studies (IREUS). “While the residential sector shows structural resilience, macro headwinds are clearly weighing on broader commercial and industrial segments.”
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‘Rare pocket of stability’
Despite the broader deterioration in sentiment, the residential market remains a “rare pocket of stability”. Asked to rate factors like rental, price, occupancy and purchases of each asset class, real estate executives proved most optimistic on suburban residential, with a current net balance of 15% and a future net balance of 15%, according to NUS Real Estate.
“Forthcoming demand from domestic homebuyers continues to anchor this segment, underscoring structural resilience in the domestic housing market even as external economic pressures mount,” notes NUS Real Estate. Survey results indicate that half of those polled still expect new residential launch prices to trend moderately higher over the next six months, while 60% anticipate launch volumes to remain relatively stable.
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While prime residential also held a positive current net balance of 5%, it softened substantially from 4Q2025’s 41%.
Qian adds: “The prime residential sector is inherently more sensitive to shifts in global capital and international buyer sentiment… With the Middle East crisis escalating global volatility and delaying anticipated interest rate cuts, institutional investors and high-net-worth individuals are shifting toward a more defensive, capital-preservation strategy.”
Commercial and industrial sectors weakened
In contrast, sentiment across commercial and industrial property sectors declined markedly.
The office sector’s current net balance fell to zero in 1Q2026 from 12% in the preceding quarter, although respondents remain positive about its outlook, with a future net balance of 15% underpinned by “thin near-term supply pipeline and low Grade-A vacancy”.
As a result, these supply-and-demand dynamics are expected to “prop up” office space.
The sharpest decline is most acute in the business park and hi-tech space segment, which posted a negative current net balance of 25% and a negative future net balance of 20%, making it the weakest-performing asset class in the survey.
Meanwhile, the retail and hospitality sentiment also weakened significantly. Current net balance for suburban retail swung from a positive 12% in 4Q2025 to negative 15% in 1Q2026, while prime retail recorded a negative net balance of 20%. Current net balance for the hotel and serviced apartment segment likewise slipped into negative 15%.
Inflation and interest rate concerns
Respondents identified rising inflation and interest rates as the primary risk to the market outlook over the next six months.
Eight in 10 respondents cited inflation and interest rates as key risks, up sharply from 11.8% in the previous quarter. Concerns about a slowdown in the global economy also increased, with 75% of respondents highlighting it as a risk, while 65% pointed to rising construction costs and 60% flagged job losses or a weakening domestic economy.
“An overwhelming 80% of respondents polled this quarter flagged rising inflation and interest rates as a primary risk,” adds Qian. “In such a tight credit environment, borrowing and debt-servicing costs can quickly become prohibitive. When coupled with the inherent lumpiness and illiquidity of real estate assets, it is natural for investors to temporarily pivot to relatively more liquid money market instruments during this period of uncertainty.”
Qian further notes that deteriorating sentiment suggests the industry is becoming increasingly defensive.
“Previously optimistic sentiment at home has been overtaken by an anticipation of dire exogenous risks,” notes Qian. “With the Composite Index slipping below the neutral threshold, it is clear that the industry is shifting from an expansionary mindset to one of defensive consolidation as businesses shift into a ‘risk-off’ stance.”
Charts: NUS RESI
See also:
Future Sentiment Index falls to 5.5 as global uncertainties weigh on market outlook: NUS RESI
