Knight Frank Commentary | JTC Industrial Statistics Q3 2026
22 October 2026
Advanced estimates released by the Ministry of Energy, Trade and Industry showed that Singapore’s economy grew by 5.4% y-o-y in Q3 2026, with the manufacturing sector continuing to expand by 7.5% y-o-y. The overall Purchasing Manager’s Index (PMI) registered 51.7 in September 2026, improving from 51.4 in July 2026 and August’s reading of 51.5. The electronics PMI continued to outperform the overall index, rising to 52.9 in September 2026. The sustained expansion in both the overall and electronics PMIs reflect continued strength in manufacturing demand, particularly from AI-related industries.
Given this background in Q3 2026, the all-industrial price index increased 1.0% q-o-q and 4.2% y-o-y. Although there were less transactions in Q3 2026 compared with the previous quarter, total investment sales value rose significantly from an estimated S$1.4 billion to about S$2.0 billion, driven by a few large-ticket deals alongside sales from newly launched strata industrial developments.
While factories with remaining lease tenures of 30 years and below chalked up only a marginal increase in the number of transactions, the total sales value almost tripled from S$360.7 million in Q2 2026 to S$972.2 million in Q3 2026. The increasing ticket sizes of some of these shorter-tenure factory assets relative to the broader industrial market underscored investor interest in industrial assets, particularly where value enhancement opportunities and competitive pricing can help offset leasehold constraints.
At the same time, the all-industrial rental index increased 0.5% q-o-q and 2.1% y-o-y. From a leasing perspective, the quarterly increase in multi-user factory and warehouse transactions was relatively measured, suggesting that much of the demand stemmed from lease renewals and ongoing space requirements rather than expansionary moves.
The JTC rental index for business parks remained fairly stable with a slight increase of 0.1% q-o-q in Q3 2026, after having eased by 0.1% q-o-q the previous quarter. Rents remained steady even as the overall occupancy rate declined from 77.9% in Q2 2026 to 77.2% in Q3 2026. In the third quarter of the year, rents for 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) edged up by 0.3% q-o-q to S$6.30 psf pm and S$3.76 psf pm respectively. On a yearly basis, the General Business Park and High-Specs Industrial rents continued to grow, while Prime Business Park rents declined by 2.3%.
Business park leasing activity grew 31.3% q-o-q, rising from 80 contracts in Q2 2026 to 105 in Q3 2026. With office rents in the Central Business District (CBD) remaining significantly higher and prime office supply constrained, business parks could offer possible space solutions, even though CBD locations remain favoured. Looking ahead, occupier movements could become increasingly fluid and strategic, with qualifying businesses evaluating locations through a broader lens that balances cost, proximity to other supporting occupiers in the value chain within a complimentary ecosystem, and growth objectives. This could result in a more dynamic leasing landscape, where demand is distributed across a combination of office and industrial options rather than concentrated in a single asset class or location.
The industrial sector’s long-term prospects remain positive, underpinned by Singapore’s stable and pro-business operating environment, even as growth narrows towards artificial intelligence, advanced manufacturing and technology driven industries. Despite Singapore’s largely leasehold industrial landscape, investor and owner-occupier interest remains firm, and capital continues to be directed towards industrial assets, with buyers increasingly prioritising properties that benefit from resilient occupier demand, dependable cash flows and opportunities to enhance value, rather than focusing solely on tenure.
On the leasing front, demand is expected to remain resilient, supported by occupiers' continued emphasis on business continuity. Qualifying corporates at the forefront of rapid expansion due to burgeoning global momentum from pioneering industries will increasingly be under pressure to consider other viable options like business parks or light industrial space as a cost-effective alternative to traditional CBD office locations. This gradual broadening of occupier demand across locations and asset classes should enhance the market's overall resilience and support healthy leasing activity. Industrial rents are expected to continue to rise at a measured pace, with full-year rental growth likely to trend towards the midpoint of the projected 1% to 3% range in 2026, having risen 1.5% from January to September.
