Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Knight Frank has reduced its Singapore plant lease development projection for 2025 to in between 0% and 2%, down from the 1% to 3% range predicted previously. The lower projection comes amid “rainy climate forward” for the industrial sector, the firm claims in an April research credit report.
In the industrial property industry, Knight Frank anticipates the prompt influence of the business war will be a decrease in transaction quantity as buyers and occupiers relocate into a state of pause. “Recurring transactions could be put on hold as influenced parties turn careful and await even more of the scenario to unfold,” the report checks out.
In spite of the recurring market turmoil, Knight Frank states rich spots remain for Singapore, provided its placement as an eye-catching and trusted financial investment and service hub. “As US President Trump’s recent statement of the 10% toll imposed on Singapore goods imported in the US appears to be the international baseline flooring (presently), manufacturers might also take into consideration expanding or relocating last-stage manufacturing tasks to Singapore,” the report includes.
Rising pressures between the United States and China, marked by tariffs and vindictive tariffs, are slowing international trade circulations, which Knight Frank expects to detrimentally influence Singapore’s production, electronic devices and logistics sectors. Currently, Singapore’s 2025 GDP projection has actually been devalued, with the Ministry of Trade and Sector decreasing its quote earlier this month to in between 0% and 2%, down from 1% to 3%.
This is assumed to place a more drag out industrial property sales activity, that has already revealed a decrease since the last quarter of 2024. Data assembled by Knight Frank suggest that complete industrial sales worth fell by 33.9% q-o-q to $680.9 million in 1Q2025. Leasing activity also declined, falling 0.4% q-o-q to 3,008 rental transactions. The deals totaled up to $25.6 million in value, 1.1% reduced q-o-q.
“The existing wave of tariff statements and modifications in the days ahead have developed and continue to produce heightened uncertainty that oblige industrial users to adopt a cautious pose, affecting movings and expansions,” observes Calvin Yeo, head of occupier strategy and services at Knight Frank Singapore.
Additionally, Singapore’s construction market is poised to grow as a result of large tasks, including Changi Airport Terminal 5 and the development of Marina Bay Sands. This, subsequently, would equate to even more need for purpose-built dormitories, with business additionally progressively seeking to convert manufacturing facility space into dorm rooms, Knight Frank claims.
The report also highlights JTC’s recent improvements to the commercial land lease structure. Revealed in March, the enhancements consist of giving an extra 3 years of lease period for all brand-new greenfield industrial developments to cover the structure and advancement period, and a new system to enable eligible tenants on 20-year JTC rents to extend them by approximately two tranches of 5 years.
