Knight Frank trims 2025 factory rental growth forecast on ‘stormy weather ahead’ for industrial sector
Knight Frank has reduced its Singapore plant rental development projection for 2025 to between 0% and 2%, down from the 1% to 3% range forecasted formerly. The lesser forecast comes amidst “rainy weather ahead” for the commercial sector, the firm says in an April research credit report.
In the commercial real estate market, Knight Frank predicts the immediate impact of the trade war will be a decline in transaction quantity as buyers and occupiers relocate into a state of pause. “Continuous deals could be put on hold as affected parties transform careful and wait for even more of the circumstance to unfold,” the report sees.
This is expected to put a further drag on commercial property sales task, that has currently revealed a decrease since the last quarter of 2024. Information put together by Knight Frank suggest that overall industrial sales value dropped 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 transactions. The deals amounted to $25.6 million in value, 1.1% reduced q-o-q.
The report also highlights JTC’s recent enhancements to the commercial land lease framework. Announced in March, the improvements include providing an added 3 years of lease period for all new greenfield industrial developments to cover the structure and growth period, and a new plan to enable qualified lessees on 20-year JTC leases to prolong them by approximately 2 tranches of 5 years.
Escalating tensions between the United States and China, noted by tariffs and vindictive tariffs, are reducing worldwide trade movements, that Knight Frank anticipates to detrimentally influence Singapore’s production, electronics and logistics sectors. Already, Singapore’s 2025 GDP projection has been devalued, with the Ministry of Trade and Sector reducing its quote previously this month to between 0% and 2%, below 1% to 3%.
“The current wave of tariff statements and changes in the days forward have produced and remain to develop increased unpredictability that oblige industrial players to embrace a careful position, influencing transfers and developments,” notes Calvin Yeo, head of occupier strategy and services at Knight Frank Singapore.
Despite the recurring market chaos, Knight Frank says bright spots continue to be for Singapore, provided its setting as an attractive and trusted investment and company center. “As US Head of state Trump’s current announcement of the 10% tariff imposed on Singapore goods imported in the US appears to be the international standard flooring (presently), producers may also think about increasing or moving last-stage production activities to Singapore,” the report adds.
On top of that, Singapore’s building market is poised to expand as a result of huge projects, consisting of Changi Airport Terminal 5 and the development of Marina Bay Sands. This, subsequently, would certainly translate to even more demand for purpose-built dorm rooms, with companies additionally significantly seeking to convert manufacturing facility room right into dorms, Knight Frank claims.
