Knight Frank Commentary | JTC Industrial Statistics Q1 2026 Industrial Research Report

Knight Frank Commentary | JTC Industrial Statistics Q1 2026 Industrial Research Report

Advanced estimates released by the Ministry of Trade and Industry showed that Singapore’s economy grew by 4.6% y-o-y in Q1 2026, with the manufacturing sector expanding by 5.0% y-o-y. Despite the steady performance of the economy in Q1, the Middle East conflict that began at the end of February is likely to rein in economic activity in the coming months.

In Q1 2026, the all-industrial price index increased 1.2% q-o-q, some three times faster than the all-industrial rental index which expanded 0.4% q-o-q. Industrial real estate prices continue to expand faster than rents as both institutional players and owner-occupier buyers continue to cautiously scour the market for suitable assets. In the leasing market, occupiers focus on business continuity amid the tensions in the Middle East and volatile energy prices.

The price increase could have been contributed to by the public listing of UI Boustead REIT, comprising 21 local industrial assets valued at S$1.3 billion as well as other large ticket transactions that were reported towards the end of Q1 2026. This included CapitaLand Ascendas REIT’s acquisition of ramp-up logistics and industrial assets at 25 Loyang Crescent together with a 50% stake in The Ascent for S$749.2 million, Standard Chartered Bank’s sale and leaseback of two Changi Business Park assets for S$183.0 million, and the sale of four warehouses by Far East Organization for S$322.0 million. Nevertheless, it was observed that aside from the notable large ticket deals, more than half of the transactions were below S$1.5 million indicating that activity remained concentrated in smaller deals.

The JTC rental index for business parks was fairly stable with slight growth of 0.3% q-o-q during the quarter, even though the overall occupancy rate eased a marginal 0.4 percentage points (pp) from 77.1% in Q4 2025 to 76.7%. In Q1 2026, Prime Business Park rents (comprising Knight Frank’s basket of modern high-quality business park properties in the Central Region) declined 1.6% q-o-q to S$6.28 psf pm, while General Business Park rents (constituting Knight Frank’s sample of business park properties in all islandwide locations) remained stable at S$3.75 psf pm. Most business park landlords are cognizant of keeping occupancy levels stable in a time of uncertainty, and can be more negotiable for both central and non-central locations wherever there is vacancy pressure.

The biomedical manufacturing cluster remained a key pillar of Singapore’s manufacturing sector and recent announcements of plant closures point to a sector specific recalibration rather than a broad slowdown. BioNTech confirmed it will cease operations at its Tuas manufacturing plant by February 2027, following a similar move by MSD (Merck & Co.), which is closing one of its facilities in the same area. Nevertheless, prior to the outbreak of hostilities in the Middle East, Singapore had secured commitments in AI infrastructure, with Bridge Data Centres pledging up to S$5 billion and Singtel's Nxera opening its largest data centre in Tuas. Micron broke ground on a US$24 billion NAND flash memory plant in the same corridor and Applied Angstrom Technology opened a precision R&D facility nearby to design next generation chipmaking equipment. Additionally, Maersk opened a 1.1 million sf, S$200 million fully automated World Gateway II warehouse in Singapore, to serve companies that are increasingly shifting towards faster, more flexible and regionally focused distribution networks.

Even though some investors could adopt a more cautious stance and delay major acquisitions in view of the Middle East conflict, the prevailing low interest rate environment should encourage selective and opportunistic transactions. Deals in advanced stages are likely to move ahead, locking in favourable borrowing costs ahead of any anticipated rate hikes with an aim of capitalising on future value when conditions stabilise. As such, Knight Frank maintains industrial property prices to grow by 3% to 5% for the full year.

On the occupier front, the sharp rise in energy prices is expected to exert cost pressures, prompting businesses to reassess their operational footprints and strategies. This can include considering less costly alternatives, such as ByteDance expanding to take up three floors at the Mapletree Business City. It remains to be seen whether this might inject more interest in business park spaces in the fringe area, especially for space users who are unable to expand their office footprint in the CBD.  On a whole, industrial rental levels are expected to remain broadly stable with some moderate growth of between 1% and 3% for the whole of 2026, undergirded by Singapore’s safe haven reputation.

View Knight Frank Singapore's Q1 2026 Industrial Market Update here.