RECOVERING MANUFACTURING SENTIMENTS
In 2026, Singapore’s economy is projected to slow down to 1.0-3.0% yoy, compared to the estimated 4.8% yoy growth in 2025. Manufacturing business sentiments have steadily recovered, and the manufacturing sector has demonstrated resilience despite global tariff uncertainty. The Purchasing Managers’ Index (PMI) inched up to 50.3 points in December, marking the fifth consecutive month of expansion. Manufacturing output grew on a yoy basis for 10 out of 11 months as of November 2025 YTD, suggesting continued manufacturing growth. Due to Singapore’s favorable tariff differential within the region, demand for high-value manufacturing and logistics space is expected to increase.
STEADY RENTAL GROWTH
Science park rents outperformed and grew by 5.7% yoy in 2025, due to the inclusion of 1 Science Park Drive into our property basket. City fringe business park rents grew moderately by 1.3% yoy while suburban business park rents remained flat in 2025. High-tech factory rents rose by 3.4% yoy, led by modern and high-spec developments. Amid improving manufacturing sentiments, conventional factory rents rose by 1.4% yoy in 2025, following flattish growth in the preceding two years. Warehouse and prime logistics rental growth moderated to 3.5% yoy and 0.9% yoy respectively in 2025. Industrial rents are projected to grow steadily by up to 2.0% yoy in 2026. Business parks and well located high-tech developments could surprise on the upside in 2026, following past few years of underperformance, amid an anticipated acceleration in Grade A office rents and as some cost-sensitive occupiers turn towards decentralised alternatives.
LOWER WAREHOUSE AND BUSINESS PARK SUPPLY IN 2026
In 2026, new factory supply looks manageable, of which multiple-user factory supply remains limited at below its 10-year average and the majority of single user factory space is pre-committed by end-users. Warehouse supply is expected to be constrained over the near term, with no new major multi-user prime logistics development anticipated to be completed in 2026. However, leasing momentum at newly completed prime logistics projects has moderated from post-pandemic highs, as tenants show resistance to current rent levels. Incoming supply of business park space will taper off sharply, with only one new development (27 International Business Park) to be completed in 2026.
