STEADY ECONOMIC GROWTH
Singapore’s economy is anticipated to grow steadily by 1.0%-3.0% yoy in 2025, a slowdown from 4.4% yoy growth in 2024. The manufacturing sector is poised to expand further in 2025, albeit at a slower pace of growth. Singapore’s Purchasing Managers’ Index (PMI) edged down slightly to 50.6 in March, though it has remained in expansionary territory for 19 consecutive months. Manufacturing output fell 1.3% yoy in February 2025, following past seven consecutive months of expansion.
SUPPLY CONCERNS ALLEVIATED BY FLIGHT TO QUALITY DEMAND
In 2025, incoming supply of new warehouse and business park spaces is expected to surge to levels above their respective ten-year historical averages. Most incoming warehouse supply are for single-users and are mostly precommitted. While the take-up of new multi-user prime logistic spaces has slowed from prior years due to tenants' resistance to heightened rent levels, new developments that are priced competitively have seen a stronger take up. New business park developments in 2025 have seen encouraging take up. For example, Punggol Digital District is reportedly 65% pre-committed and 1 Science Park Drive is 76% occupied, with 19% of the remaining space under advanced negotiations.
INDUSTRIAL RENTS EDGE HIGHER
Rental performance of city fringe and suburban business parks continued to bifurcate in Q1 2025. City fringe business park rents edged up by 0.3% qoq while suburban business park rents fell slightly by -0.1% qoq. Science park rents outperformed and rose 4.8% qoq in Q1 2025, due to adjustment to our property basket to include 1 Science Park Drive. The robust take-up of 1 Science Park Drive reflects a sustained flight to quality demand, creating future vacancy risks for older industrial developments.
Driven by newer and better-located properties, high-tech rents rose 0.4% qoq. Supported by the ongoing manufacturing recovery, conventional factories recorded slight rental growth of 0.3% qoq. Warehouse rents increased by 1.3% qoq while prime logistics rents remained flat in Q1 2025.