Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Knight Frank has decreased its Singapore factory lease development forecast for 2025 to in between 0% and 2%, below the 1% to 3% range anticipated formerly. The lesser projection comes in the middle of “stormy climate to come” for the commercial sector, the firm says in an April research review.
In the commercial realty industry, Knight Frank predicts the immediate impact of the business war will be a reduction in operation volume as buyers and occupiers move into a state of pause. “Ongoing deals could be postponed as affected parties transform cautious and wait on even more of the circumstance to unfold,” the report sees.
“The current spate of tariff statements and adjustments in the days forward have created and continue to produce increased unpredictability that oblige industrial users to take on a cautious position, influencing relocations and expansions,” notices Calvin Yeo, head of tenant approach and services at Knight Frank Singapore.
On top of that, Singapore’s construction industry is poised to expand because of big projects, including Changi Airport Terminal 5 and the development of Marina Bay Sands. This, consequently, would certainly equate to even more demand for purpose-built dorms, with companies additionally increasingly looking for to transform factory space right into dormitories, Knight Frank says.
This is expected to place a further drag on industrial property sales activity, that has currently shown a decrease ever since the last quarter of 2024. Information assembled by Knight Frank suggest that total industrial sales value slipped by 33.9% q-o-q to $680.9 million in 1Q2025. Leasing activity additionally decreased, dropping 0.4% q-o-q to 3,008 rental deals. The transactions amounted to $25.6 million in value, 1.1% lower q-o-q.
In spite of the ongoing market turmoil, Knight Frank claims bright places stay for Singapore, provided its position as an eye-catching and trusted financial investment and service hub. “As United States President Trump’s recent news of the 10% toll imposed on Singapore goods imported in the US seems the international standard flooring (presently), manufacturers may also consider expanding or moving last-stage production activities to Singapore,” the report includes.
Intensifying pressures between the US and China, noted by tolls and retaliatory tolls, are slowing international trade circulations, that Knight Frank expects to detrimentally impact Singapore’s production, electronic devices and logistics sectors. Currently, Singapore’s 2025 GDP forecast has been downgraded, with the Ministry of Trade and Sector decreasing its price quote earlier this month to in between 0% and 2%, below 1% to 3%.
The report also emphasize JTC’s recent improvements to the commercial land lease structure. Revealed in March, the improvements consist of providing an additional three years of lease period for all new greenfield commercial advancements to cover the structure and advancement duration, and a brand-new scheme to allow eligible tenants on 20-year JTC leases to prolong them by approximately two tranches of 5 years.
