The decision draws a line under the diplomatic dispute between the two island territories, that local media reports suggested
had emanated from pressure from China.
Hong Kong's commissioner of Customs and Excise Roy Tang said in a statement Tuesday that the troop carriers were seized due to a "suspected breach of the Hong Kong law."
Customs officials had finished their investigation and charges could be still laid, he added.
Singapore's Defense Ministry has long maintained the vehicles were used "in routine overseas training and shipped back via commercial means as with previous exercises."
"SAF Terrexes are coming home to Singapore. Looking forward to this happy reunion with all Singaporeans in the Year of the Rooster," Ng Eng Hen, Singapore's defense minister posted on his Facebook page Tuesday.
At a regular press conference Wednesday, Chinese Foreign Ministry spokeswoman Hua Chunying said Singapore had violated Hong Kong law by shipping the carriers into the city.
"We hope the Singaporean side will cooperate with Hong Kong to handle the aftermath and also learn a lesson from the case," she said.
Slap on the wrist for Singapore
Some analysts have viewed the impounding of these troop carriers as a slap on the wrist for Singapore over its tough stance on the South China Sea.
Singapore had urged China to abide by an international tribunal that ruled its claims to the waters were unlawful, Zhang Baohui, a professor of political science at Hong Kong's Lingnan University, told CNN last year.
Singapore's decision to ship troop carriers that had been in Taiwan via Hong Kong earned the city-state an unusual public reprimand from China.
"China opposes any country with which it has established diplomatic ties from conducting any official exchanges, including military, and cooperation with Taiwan. We urge the Singapore government to keep its promise to the 'One China' principle," Geng Shuang, a spokesman for Ministry of Foreign Affairs said at the time.
Under the "One China" policy countries do not maintain diplomatic relations with self-governing Taiwan, which Beijing considers part of its territory.
The seizure of the armored vehicles also gave China a chance to remind Taiwan of its place in the world by attempting to isolate the country from Singapore, one of its strongest allies, one analyst said.
"China has been restricting Taiwan from entering various international organizations and putting more pressure (on the country)," Yvonne Chiu, an assistant professor at Hong Kong University told CNN.
China was already irked by the election of Tsai Ing-wen and her independence-leaning Democratic Progressive party in January 2016.
The election marked the first time the pro-China Kuomintang (KMT) or Nationalist Party had lost control of the island's legislature.
Tsai campaigned for greater democracy in Taiwan and said upon her election that "our democratic way of life is forever the resolve of Taiwan's 23 million people."
'Chinese New Year gift'
Singapore and Taiwan have a long-standing defense agreement known as Project Starlight, signed in 1974. This has allowed Singapore -- a crowded city state with lack of space -- to conduct annual military drills in Taiwan.
China doesn't want these training exercises to take place in Taiwan and feels powerful enough to speak out against small countries like Singapore that might challenge China's national interests, said Williams.
He added, however, that neither Singapore nor China wanted the issue to drag on.
"China wants to send a message, but it doesn't want to aggravate relations with Singapore," he said.
"Giving the troop carriers back now is like a Chinese New Year gift."