Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Knight Frank has minimized its Singapore factory rental development forecast for 2025 to in between 0% and 2%, down from the 1% to 3% range predicted previously. The lower projection comes amid “stormy climate to come” for the commercial industry, the firm says in an April research report.
This is assumed to put a further drag out industrial property sales activity, that has already shown a decline ever since the last quarter of 2024. Data put together by Knight Frank suggest that total industrial sales value dropped by 33.9% q-o-q to $680.9 million in 1Q2025. Leasing task also decreased, dropping 0.4% q-o-q to 3,008 rental deals. The transactions amounted to $25.6 million in value, 1.1% reduced q-o-q.
Regardless of the recurring market turmoil, Knight Frank states brilliant spots remain for Singapore, offered its setting as an appealing and relied on financial investment and company hub. “As US Head of state Trump’s current announcement of the 10% tariff imposed on Singapore goods imported in the US seems the international standard flooring (right now), producers may also take into consideration increasing or relocating last-stage manufacturing tasks to Singapore,” the record includes.
Intensifying pressures between the US and China, marked by tolls and retaliatory tariffs, are reducing international trade movements, which Knight Frank anticipates to detrimentally affect Singapore’s manufacturing, electronic devices and logistics sectors. Currently, Singapore’s 2025 GDP projection has been devalued, with the Ministry of Trade and Sector reducing its estimate previously this month to between 0% and 2%, below 1% to 3%.
Additionally, Singapore’s building market is positioned to expand as a result of big tasks, including Changi Airport Terminal 5 and the expansion of Marina Bay Sands. This, in turn, would convert to even more demand for purpose-built dorms, with firms also progressively looking for to convert factory space right into dormitories, Knight Frank says.
The report also highlights JTC’s recent improvements to the industrial land lease structure. Reported in March, the improvements consist of offering an added three years of lease period for all brand-new greenfield industrial growths to cover the building and growth duration, and a brand-new scheme to allow qualified tenants on 20-year JTC rents to expand them by approximately 2 tranches of five years.
“The existing spate of tariff announcements and changes in the days to come have created and remain to create strengthened uncertainty that compel commercial players to embrace a careful stance, influencing movings and developments,” observes Calvin Yeo, head of occupier approach and services at Knight Frank Singapore.
In the industrial real estate industry, Knight Frank anticipates the instant effect of the business battle will be a decline in transaction quantity as buyers and occupiers move right into a form of pause. “Recurring transactions might be put on hold as impacted parties turn careful and await more of the circumstance to unfold,” the report checks out.
