%20(1).jpg?ACcUKO8NkrBPLRULr6aNvFilg7alULzI&itok=stpidYVa "Knight Frank has reduced its Singapore factory rental growth forecast for 2025 to between 0% and 2%, down from the 1% to 3% range predicted previously (Picture: Samuel Isaac Chua/The Edge Singapore)")
Knight Frank has reduced its Singapore factory rental growth forecast for 2025 to between 0% and 2%, down from the 1% to 3% range predicted previously. The lower forecast comes amid “stormy weather ahead” for the industrial sector, the firm says in an April research report.
“The current spate of tariff announcements and changes in the days ahead have created and continue to create heightened uncertainty that compel industrial players to adopt a cautious posture, impacting relocations and expansions,” observes Calvin Yeo, head of occupier strategy and solutions at Knight Frank Singapore.
Escalating tensions between the US and China, marked by tariffs and retaliatory tariffs, are slowing global trade flows, which Knight Frank expects to detrimentally impact Singapore’s manufacturing, electronics and logistics sectors. Already, Singapore’s 2025 GDP forecast has been downgraded, with the Ministry of Trade and Industry lowering its estimate earlier this month to between 0% and 2%, down from 1% to 3%.
In the industrial real estate market, Knight Frank predicts the immediate impact of the trade war will be a decline in transaction volume as buyers and occupiers move into a state of pause. “Ongoing transactions could be put on hold as affected parties turn cautious and wait for more of the situation to unfold,” the report reads.
This is expected to put a further drag on industrial property sales activity, which has already shown 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, falling 0.4% q-o-q to 3,008 rental transactions. The transactions amounted to $25.6 million in value, 1.1% lower q-o-q.
Despite the ongoing market turmoil, Knight Frank says bright spots remain for Singapore, given its position as an attractive and trusted investment and business hub. “As US President Trump’s recent announcement of the 10% tariff imposed on Singapore goods imported in the US appears to be the international baseline floor (at the moment), manufacturers might also consider expanding or moving last-stage production activities to Singapore,” the report adds.
In addition, Singapore’s construction sector is poised to grow due to large projects, including Changi Airport Terminal 5 and the expansion of Marina Bay Sands. This, in turn, would translate to more demand for purpose-built dormitories, with companies also increasingly seeking to convert factory space into dormitories, Knight Frank says.
The report also highlights JTC’s recent enhancements to the industrial land lease framework. Announced in March, the enhancements include offering an additional three years of lease tenure for all new greenfield industrial developments to cover the building and development period, and a new scheme to allow eligible lessees on 20-year JTC leases to extend them by up to two tranches of five years.
