Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Knight Frank has lowered its Singapore plant lease development forecast for 2025 to in between 0% and 2%, below the 1% to 3% range predicted previously. The lower forecast comes amid “rainy climate to come” for the industrial sector, the firm states in an April research report.
Despite the recurring market chaos, Knight Frank claims rich spots stay for Singapore, given its setting as an appealing and relied on financial investment and company center. “As United States President Trump’s recent news of the 10% toll imposed on Singapore goods imported in the US appears to be the international baseline floor (currently), producers might also take into consideration broadening or relocating last-stage manufacturing activities to Singapore,” the report includes.
In the commercial real estate market, Knight Frank anticipates the immediate effect of the trade battle will be a decline in transaction quantity as buyers and occupiers move right into a state of pause. “Continuous purchases might be postponed as affected parties turn cautious and await more of the scenario to unfold,” the report sees.
“The current wave of tariff statements and modifications in the days forward have developed and continue to develop increased uncertainty that oblige industrial players to embrace a careful posture, affecting movings and growths,” notices Calvin Yeo, head of occupier strategy and services at Knight Frank Singapore.
Escalating pressures in between the US and China, marked by tolls and retaliatory tolls, are slowing global trade circulations, that Knight Frank anticipates to detrimentally influence Singapore’s production, electronics and logistics sectors. Currently, Singapore’s 2025 GDP forecast has actually been downgraded, with the Ministry of Trade and Industry lowering its price quote previously this month to between 0% and 2%, down from 1% to 3%.
Additionally, Singapore’s building sector is poised to grow because of big tasks, including Changi Airport Terminal 5 and the development of Marina Bay Sands. This, subsequently, would equate to more demand for purpose-built dorms, with business additionally increasingly seeking to transform factory area into dormitories, Knight Frank states.
The report also emphasize JTC’s recent enhancements to the commercial land lease framework. Declared in March, the improvements include providing an added 3 years of lease tenure for all brand-new greenfield industrial developments to cover the structure and advancement period, and a new system to enable eligible lessees on 20-year JTC leases to prolong them by up to 2 tranches of 5 years.
This is anticipated to put a further drag on commercial property sales activity, which has already revealed a decline since the last quarter of 2024. Data assembled by Knight Frank indicate that overall industrial sales value fell 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 transactions. The transactions totaled up to $25.6 million in value, 1.1% reduced q-o-q.
