Knight Frank Commentary | JTC Industrial Statistics Q2 2026

Advanced estimates released by the Ministry of Trade and Industry showed that Singapore’s economy grew by 5.7% y-o-y in Q2 2026, with the manufacturing sector expanding by a substantial 12.2% y-o-y despite the Middle East conflict. The overall Purchasing Manager’s Index (PMI) registered 51.3 in June 2026, better than the 50.7 and 51.0 recorded in April and May 2026 respectively. The electronics PMI continued to outperform the overall index, recording 52.2 in June 2026. The current momentum of growth in both manufacturing and electronics was largely driven by strong global demand for AI-related products, especially computer chips. Factories remained busy as new orders kept pouring in, while major technology companies continued investing heavily in AI infrastructure. This steady demand kept the sectors resilient despite ongoing geopolitical tensions and supply chain challenges.

In Q2 2026, both the all-industrial price index and all-industrial rental index increased at around the same pace of 0.6% q-o-q and 0.5% q-o-q respectively.

There were less industrial sales transactions were recorded in Q2 2026 as activity returned to more normalised levels after Q1 2026 when UI Boustead REIT was listed. There was also an absence of big-ticket deals, as the number of transactions of S$10 million and above fell from 39 in Q1 2026 to just 16 in Q2 2026. At the same time, sub-S$10 million transactions remained relatively resilient, with 370 deals recorded in Q2 2026, similar to the 383 in Q1 2026, suggesting that owner-occupiers continued to seek space for business continuity.

The JTC rental index for business parks remained fairly stable with a slight easing of 0.1% q-o-q in Q2 2026, even as the overall occupancy rate increased moderately from 76.7% to 77.9%. In Q2 2026, the Prime Business Park (comprising Knight Frank’s basket of modern high-quality business park properties in the Central Region) and General Business Park  (constituting Knight Frank’s sample of business park properties in all islandwide locations) rents remained steady at S$6.28 psf pm and S$3.75 psf pm respectively. On a yearly basis, Prime Business Park rents contracted 2.2%, while General Business Park was broadly unchanged, edging up by a slight 0.8%. Rents for qualifying clean activities in these industrial properties remained relatively more affordable, even as prime Central Business District (CBD) office rents stayed elevated due to the tight supply of high-quality space. As such, occupiers with expansion needs, as well as those resisting rising rental costs, could increasingly look beyond the CBD to alternative locations such as Prime Business Parks. As not all tenants are able or willing to absorb the escalating rental premiums associated with prime CBD offices, growing spillover demand into well-located business parks that offer amenities and accessibility akin to CBD office environments could begin to gain some traction.

Leasing demand is expected to remain firm as the impact of ongoing expansion and the growing adoption of AI and automation tickle down from large-scale manufacturers to domestic small-and-medium enterprises. At the same time, well-connected, amenity-rich business park buildings such as Galaxis were observed to be in the process of backfilling decanted spaces from larger former occupiers that upgraded to other locations or facilities. Knight Frank maintains overall industrial rents to grow at a resilient pace of between 1% and 3% for the whole of 2026.

The investment momentum into facilities for advanced manufacturing, AI infrastructure and logistics automation is expected to remain strong as global companies increasingly seek safe-haven locations to navigate geopolitical conflicts, political barriers and trade obstacles. This is consistent with Singapore's strong fixed asset investment (FAI) performance in Q1 2026, where total FAI commitments rose 40.9% y-o-y, driven largely by manufacturing investments. Notably, commitments in the electronics sector surged to S$2.2 billion from just S$55.0 million in Q1 2025. Although investment sales could become more selective in the near term, both private and institutional investors, as well as business owners continue to keep an eye out for opportunities. Industrial property prices are projected to grow 3% to 5% for the full year, as a result of resilient owner-occupier demand and Singapore's appeal as a hub.fall in the 7,000 to 9,000 range forecasted by Knight Frank earlier this year.