Singapore’s serviced apartment sector faces supply shortage, attracting investor interest

SINGAPORE: Singapore’s serviced apartment market is emerging as a prime investment opportunity, driven by strong demand from business travellers, expatriates, and long-term visitors. However, a critical supply shortage is limiting growth, setting the stage for rising rental prices and high occupancy rates, according to a new report by M&G Investments.

Unlike other developed markets, Singapore has seen slower expansion in its serviced apartment sector despite increasing demand. This imbalance between supply and demand has created an attractive investment climate, positioning the sector for steady price appreciation.

Beyond serviced apartments, Singapore’s retail real estate market has also seen a surge in investor interest.

M&G’s report highlights that the sector has climbed from 8th to 4th place in investor preference rankings for 2024 and 2025, reflecting growing confidence in its resilience and income-generating potential. Notably, prime assets such as Compass One Shopping Centre in Sengkang have contributed to this positive sentiment.

As global retail undergoes transformation, Singapore’s shopping centres continue to attract strong consumer footfall and provide stable rental income, reinforcing their appeal to institutional investors.

While logistics remains a top investment priority across the Asia-Pacific region, M&G has taken a more selective approach to Singapore’s logistics sector. The report indicates that markets like Australia, where vacancy rates are lower and rental growth is stronger, present a more attractive proposition for logistics investments.

Similarly, M&G remains cautious about data centre investments in Singapore. High capital costs, operational risks, and rapid technological advancements pose challenges, making data centres less suitable for core investment strategies focused on stable, long-term income.

The report notes that the real estate component of data centres typically accounts for only 20-30% of total investment, further limiting their appeal within traditional real estate portfolios.

Despite these sector-specific considerations, overall investor sentiment towards Singapore’s real estate market remains positive. European institutional investors, in particular, are showing increased interest in the country’s property sector, drawn by its reputation for stability and lower market volatility.

As cross-border investment activity continues to rise, experts believe Singapore’s serviced apartment and retail sectors will remain key areas of focus. With strong rental demand, resilient shopping centres, and a favourable investment climate, these segments are expected to offer both short-term growth opportunities and long-term stability in an evolving real estate landscape.