CAUTIOUS OUTLOOK
Singapore’s economy grew by 3.9% yoy in Q1 2025, easing from 5% yoy growth in the previous quarter. Economic growth is forecasted to moderate to 0.0%-2.0% yoy in 2025, compared to 4.4% yoy growth in 2024. Ongoing trade and tariff uncertainties have led to increasing cautiousness in manufacturing business sentiments and outlook. The Purchasing Managers’ Index (PMI) remained in contraction for the second consecutive month, though it rose slightly to 49.7 in May. Manufacturing output growth slowed down to 3.9% yoy in May.
INDUSTRIAL RENTS MODERATE AMIDST UNCERTAINTY
Amid higher vacancy rates, warehouse rental growth moderated to 1.0% qoq, while prime logistics rents remained flat in Q2 2025. Conventional factory rents continued to grow by 0.5% qoq, though rental growth is expected to moderate in the coming quarters due to an expected slowdown in manufacturing recovery. High-tech rents rose by 0.7% qoq in Q2 2025, driven by newer and betterlocated properties. City fringe business park rents grew by 0.7% qoq while suburban business park rents rose by 0.1% qoq, due to higher rent for one of the projects in our property basket. While industrial rental growth is expected to moderate, most industrial properties could still see positive rental reversions as their leases come up for renewal given the robust industrial rental growth in
recent years.
STEADY TAKE-UP RATES AT NEW DEVELOPMENTS
For the multiple-user factory segment, its incoming supply remains limited at below its ten-year historical average. Prime logistics and warehouse spaces will see higher supply in 2025, though majority are for single-users and hence precommitted. New multi-user prime logistics spaces have seen steady take-up rates despite current uncertainty. Recently completed multi-user prime logistics project 36 Tuas Road is estimated to be 57% occupied, while upcoming projects this year include Mapletree Joo Koon Logistics Hub (50% pre-committed) and 5 Toh Guan Road East (50% pre-committed). Business park new supply is expected to taper off in 2026 after the completion of Punggol Digital District (PDD) and 1 Science Park Drive. New business park developments have seen
encouraging take-up rates with tenants preferring close to city locations. 1 Science Park Drive, which is part of Geneo at the greater one-north region, is estimated 78% taken up and PDD is 65% taken up.
