Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Escalating stress between the US and China, marked by tariffs and retaliatory tolls, are slowing worldwide trade flows, which Knight Frank expects to detrimentally influence Singapore’s manufacturing, electronic devices and logistics sectors. Already, Singapore’s 2025 GDP forecast has actually been downgraded, with the Ministry of Trade and Sector lowering its estimate earlier this month to in between 0% and 2%, down from 1% to 3%.
Knight Frank has decreased its Singapore plant lease development projection for 2025 to in between 0% and 2%, below the 1% to 3% range predicted formerly. The lower projection comes amid “stormy weather to come” for the industrial field, the firm says in an April research credit report.
On top of that, Singapore’s construction sector is poised to expand as a result of large jobs, including Changi Airport Terminal 5 and the expansion of Marina Bay Sands. This, consequently, would equate to even more need for purpose-built dorms, with companies additionally progressively looking for to transform manufacturing facility space into dormitories, Knight Frank claims.
This is expected to put a more drag on commercial property sales activity, which has already revealed a decline since the last quarter of 2024. Data compiled by Knight Frank indicate that total industrial sales value fell by 33.9% q-o-q to $680.9 million in 1Q2025. Leasing activity also declined, dropping 0.4% q-o-q to 3,008 rental deals. The deals totaled up to $25.6 million in value, 1.1% reduced q-o-q.
Regardless of the continuous market chaos, Knight Frank says bright areas remain 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 current statement of the 10% toll imposed on Singapore goods imported in the US appears to be the international standard flooring (at the moment), producers might also take into consideration increasing or relocating last-stage manufacturing activities to Singapore,” the record includes.
“The current spate of tariff statements and changes in the days to come have actually created and continue to produce heightened unpredictability that oblige commercial players to embrace a mindful position, influencing movings and growths,” notes Calvin Yeo, head of occupier approach and solutions at Knight Frank Singapore.
In the industrial property market, Knight Frank predicts the immediate effect of the trade battle will be a decrease in operation quantity as buyers and occupiers relocate into a state of pause. “Continuous deals might be put on hold as impacted parties transform careful and await more of the circumstance to unfold,” the report checks out.
The report also highlights JTC’s current improvements to the industrial land lease structure. Revealed in March, the improvements include offering an additional 3 years of lease period for all new greenfield commercial advancements to cover the building and growth period, and a brand-new plan to allow eligible lessees on 20-year JTC rents to prolong them by up to 2 tranches of five years.
