Q1 2025 Industrial Statistics from JTC

Based on advance estimates from the Ministry of Trade and Industry (MTI), the manufacturing sector expanded 5.0% y-o-y in Q1 2025, but on a quarterly basis, the manufacturing sector shrank 4.9% in Q1 2025, a worrying decline from the flat growth in the previous quarter. While the industrial real estate sector has been characterised by consistent stability and resilience, it remains to be seen whether it can weather the uncertainty that has ratcheted up with the US initiated tariffs.

In Q1 2025, the all-industrial price index increased 1.5% q-o-q, even though industrial property sales activity slowed from the last quarter of 2024. Total sales value declined 33.9% q-o-q to S$680.9 million with 355 transactions in Q1 2025. Nevertheless, a few sizable deals closed during the quarter, such as the sale of a single-user factory at 23 Lok Yang Way for S$70.1 million in March, and a multiple-user factory at New Industrial Road that was sold for S$62.0 million in February.

At the same time, the all-industrial rental index expanded marginally by 0.5% q-o-q even as the overall occupancy rate stayed flat, unchanged from the 89.0% in Q4 2024. The multiple-user factory occupancy rate recorded a slight increase of 0.3 percentage points (pp) q-o-q to 91.3%, and single-user factories inched up 0.6 pp q-o-q to 88.6%. However, the overall occupancy in business parks fell 2.0 pp q-o-q to 75.9% in Q1 2025. One reason for the fall in occupancy was due to the completion of more business park space comprising Geneo in the Central Region, and more of Punggol Digital District (PDD) in the North-East Region. As more occupiers who have been pre-committed space in PDD complete their fit-out and start operations, the occupancy rate in the North-East should strengthen.

The widespread US tariffs are presently inciting a global trade war, especially the escalations between the US and China. As tariffs and retaliatory tariffs slow global trade flows, Singapore's manufacturing, electronics, and logistics sectors are expected to be impacted given the country’s heavy reliance on exports and global trade. In the industrial market, the immediate impact will be delays and declines in transaction volume as buyers and enterprise occupiers are startled 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. This will impact decision making especially for factory, business park and warehouse relocations and expansions, as the global economy reconfigures to a new world order.

In spite of the ongoing turmoil, Singapore remains a trusted investment and business hub, with the construction sector poised to grow on the back of large projects such as the development of Changi Airport Terminal 5 and the US$8 billion expansion of Marina Bay Sands. Together with the marine and process sectors, construction and manufacturing firms continue to require space to house workers in purpose-built dormitories (PBDs), and are also increasingly seeking to convert factory space into dormitories (factory-converted dormitories (FCDs)).

Despite the increasing volatility, not everything is bleak for Singapore’s industrial landscape. The more uncertain the world becomes, Singapore’s safe haven status is further highlighted. 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.

Even though industrial prices and rents are steady at the moment, the current tariff announcements and in the days ahead have created and continue to create heightened uncertainty. The global economic and political outlook has taken a turn for the worse with more volatility expected from the US Trump administration. For an export manufacturing economy such as Singapore the impact of the sweeping tariffs in the immediate-term could cause factory rental growth downwards from the original projection of 1% to 3% in 2025 to 0% to 2%.