Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
The report also highlights JTC’s current improvements to the industrial land lease structure. Reported in March, the enhancements consist of offering an additional three years of lease tenure for all new greenfield commercial advancements to cover the structure and advancement period, and a brand-new system to allow qualified tenants on 20-year JTC leases to extend them by approximately two tranches of five years.
Escalating stress between the United States and China, noted by tariffs and retaliatory tariffs, are reducing worldwide trade movements, which Knight Frank anticipates to detrimentally affect Singapore’s production, electronics and logistics sectors. Currently, Singapore’s 2025 GDP projection has been reduced, with the Ministry of Trade and Industry decreasing its price quote earlier this month to between 0% and 2%, below 1% to 3%.
Knight Frank has reduced its Singapore plant lease development projection for 2025 to in between 0% and 2%, below the 1% to 3% range anticipated formerly. The lesser forecast comes amid “rainy weather ahead” for the commercial field, the firm says in an April research report.
This is expected to place a further drag out industrial property sales task, that has already revealed a decline ever 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 task also declined, falling 0.4% q-o-q to 3,008 rental transactions. The transactions amounted to $25.6 million in value, 1.1% reduced q-o-q.
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Furthermore, Singapore’s construction industry is positioned to expand as a result of huge tasks, including Changi Airport Terminal 5 and the growth of Marina Bay Sands. This, in turn, would certainly translate to more need for purpose-built dormitories, with companies additionally progressively looking for to transform factory space right into dormitories, Knight Frank states.
“The current spate of tariff announcements and changes in the days forward have actually developed and continue to create increased uncertainty that compel commercial users to adopt a cautious pose, affecting movings and expansions,” notices Calvin Yeo, head of tenant strategy and solutions at Knight Frank Singapore.
In the industrial real estate market, Knight Frank predicts the immediate influence of the business war will be a decrease in operation quantity as buyers and occupiers move into a form of pause. “Recurring deals could be put on hold as influenced parties turn careful and wait for more of the situation to unfold,” the report sees.
In spite of the recurring market turmoil, Knight Frank states bright areas continue to be for Singapore, offered its placement as an appealing and trusted investment and service hub. “As United States Head of state Trump’s recent announcement of the 10% toll imposed on Singapore goods imported in the US seems the international standard flooring (at the moment), producers might also think about broadening or moving last-stage manufacturing activities to Singapore,” the record includes.
