Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Rising stress in between the US and China, noted by tariffs and retaliatory tariffs, are slowing down global trade flows, which Knight Frank expects to detrimentally impact Singapore’s production, electronic devices and logistics sectors. Already, Singapore’s 2025 GDP projection has actually been downgraded, with the Ministry of Trade and Sector lowering its estimate previously this month to between 0% and 2%, down from 1% to 3%.
This is anticipated to put a more drag out commercial property sales activity, which has already shown a decrease ever since the last quarter of 2024. Information put together by Knight Frank show that total industrial sales value slipped by 33.9% q-o-q to $680.9 million in 1Q2025. Leasing task additionally declined, dropping 0.4% q-o-q to 3,008 rental deals. The transactions totaled up to $25.6 million in value, 1.1% lower q-o-q.
In the industrial real estate market, Knight Frank predicts the instant influence of the trade war will be a decline in operation quantity as buyers and occupiers move into a form of pause. “Ongoing purchases might be put on hold as impacted parties transform cautious and wait for even more of the situation to unfold,” the report reads.
The report also emphasize JTC’s recent improvements to the industrial land lease framework. Reported in March, the enhancements consist of giving an added 3 years of lease tenure for all new greenfield commercial advancements to cover the building and advancement period, and a brand-new plan to enable qualified lessees on 20-year JTC rents to extend them by up to two tranches of 5 years.
Additionally, Singapore’s building sector is positioned to grow as a result of big tasks, consisting of Changi Airport Terminal 5 and the development of Marina Bay Sands. This, consequently, would convert to even more need for purpose-built dorm rooms, with business additionally significantly seeking to convert manufacturing facility space into dormitories, Knight Frank says.
In spite of the ongoing market chaos, Knight Frank states brilliant places stay for Singapore, offered its setting as an eye-catching and relied on financial 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 floor (currently), producers may also consider broadening or moving last-stage manufacturing tasks to Singapore,” the record adds.
Knight Frank has decreased its Singapore plant lease growth forecast for 2025 to in between 0% and 2%, down from the 1% to 3% range forecasted previously. The lower projection comes in the middle of “stormy weather forward” for the industrial sector, the firm states in an April research credit report.
“The current spate of tariff statements and modifications in the days to come have developed and continue to develop heightened unpredictability that oblige industrial players to take on a mindful position, impacting transfers and developments,” observes Calvin Yeo, head of occupier technique and services at Knight Frank Singapore.
