Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Knight Frank has lowered its Singapore plant rental development forecast for 2025 to between 0% and 2%, down from the 1% to 3% range forecasted previously. The lesser forecast comes in the middle of “stormy weather ahead” for the industrial sector, the firm states in an April research review.
In the industrial real estate industry, Knight Frank anticipates the instant influence of the trade battle will be a decline in operation volume as buyers and occupiers move right into a form of pause. “Recurring purchases could be put on hold as impacted parties turn cautious and wait on even more of the situation to unravel,” the report checks out.
Despite the recurring market chaos, Knight Frank states rich spots stay for Singapore, offered its placement as an appealing and trusted investment and business center. “As US Head of state Trump’s current news of the 10% tariff imposed on Singapore goods imported in the US appears to be the international standard flooring (right now), manufacturers might also consider increasing or relocating last-stage production activities to Singapore,” the record includes.
“The existing wave of tax statements and adjustments in the days ahead have developed and continue to produce increased uncertainty that oblige commercial players to embrace a mindful posture, impacting movings and growths,” observes Calvin Yeo, head of tenant method and services at Knight Frank Singapore.
The report also highlights JTC’s current improvements to the commercial land lease structure. Revealed in March, the improvements consist of offering an extra 3 years of lease tenure for all new greenfield industrial growths to cover the structure and advancement period, and a new system to allow eligible tenants on 20-year JTC rents to prolong them by as much as two tranches of 5 years.
Escalating stress between the US and China, noted by tolls and vindictive tariffs, are reducing global trade flows, that Knight Frank anticipates to detrimentally influence Singapore’s production, electronics and logistics sectors. Already, Singapore’s 2025 GDP projection has actually been reduced, with the Ministry of Trade and Industry lowering its estimate previously this month to in between 0% and 2%, down from 1% to 3%.
In addition, Singapore’s building sector is positioned to expand because of huge projects, including Changi Airport Terminal 5 and the development of Marina Bay Sands. This, consequently, would convert to more need for purpose-built dorm rooms, with firms additionally significantly looking for to convert factory area into dorm rooms, Knight Frank states.
This is anticipated to put a more drag out industrial property sales activity, that has currently shown a decline since the last quarter of 2024. Information put together by Knight Frank suggest that overall industrial sales worth slipped by 33.9% q-o-q to $680.9 million in 1Q2025. Leasing activity also declined, falling 0.4% q-o-q to 3,008 rental deals. The purchases totaled up to $25.6 million in value, 1.1% reduced q-o-q.
