_Knight Frank Commentary | JTC Industrial Statistics Q4 2025
Advanced estimates released by the Ministry of Trade and Industry (MTI) showed that Singapore’s economy expanded by 5.7% y-o-y in Q4 2025, accelerating from the 4.3% y-o-y growth in Q3 2025. For the whole year, the economy grew 4.8%, better than the 4.4% registered in 2024. The manufacturing sector led the growth in the final quarter of 2025 with a 15.0% y-o-y expansion, supported by strong output in the biomedical manufacturing and electronics clusters.
In Q4 2025, the all-industrial price index increased 1.4% q-o-q and 5.0% y-o-y. Buying interest in industrial assets remained active with several high-value transactions in the last three months of 2025. These included the sale of a freehold warehouse at 680 Upper Thomson Road for S$351.0 million, as well as the divestment of eight industrial properties by ESR Real Estate Investment Trust for S$338.1 million. Prime, freehold industrial assets will continue to attract strong interest, especially from buyers focused on business continuity and long-term capital preservation. At the same time, a growing segment of investors has become increasingly receptive to shorter-tenure factories and warehouses, seeking enhanced property yields supported by the stable rental income and more affordable prices.
The all-industrial rental index expanded 0.5% q-o-q and 2.4% for the whole of 2025, despite the overall occupancy rate easing slightly by 0.4 percentage points to 88.7% from the 89.1% in Q3 2025. The overall industrial occupancy rate was largely stable throughout most of 2025, having declined a mere 0.3 pp in a year that was characterised by global volatility as a result of trade tariff announcements as well as political conflict disrupting manufacturing and supply chains. Even though the occupancy rate for business parks remained under the 80% level, rents at such properties have by and large remained intact with a 0.4% q-o-q and 2.6% y-o-y gain.
The outlook for the Singapore manufacturing sector was mixed for much of 2025, before showing clear signs of improvement in the second half of the year. Against this backdrop, there was a notable increase in sales of leasehold factories with remaining tenures of less than 30 years compared with a year ago, pointing towards a broader shift and acceptance in investor appetite for shorter-tenure industrial assets. Despite the economy performing better than initially expected, business owners and institutional investors continue to operate amid persistent headwinds. In this context, factories with shorter remaining leases may present an attractive value proposition of providing stable income returns and potential pricing flexibility as investors navigate a more uncertain operating landscape. Such opportunities are likely to remain in 2026, complementing continued demand for prime and freehold industrial assets. As a result, Knight Frank expects industrial property prices to rise by 3% to 5% over the full year.
At the same time, industrial leasing activity in 2026 is expected to remain measured, as occupiers continue to adopt cost-optimisation strategies amid an uncertain operating environment. With the completion of the Johor Bahru–Singapore RTS Link in end-2026, some firms may relocate non-core and backend functions across the Causeway. However, any additional space released into the market is likely to be absorbed by other occupiers seeking to strengthen operational resilience as part of their business continuity planning, thereby limiting any decline in overall leasing volumes. As such, rental levels are expected to remain broadly stable with some moderate growth of between 1% and 3%. However, the rental outlook for older non-centrally located business parks is likely to be less sanguine, with growth generally plateauing in 2026. In Q4 2025, business park occupancy rates of 73.0% was recorded in the east region, 63.0% in the west region and 58.6% in the north-east region.