Industrial leasing in Singapore jumped 7.9% in Q2 as AI and semiconductor demand drove occupier appetite, even as investment sales fell 66% from a REIT-inflated Q1.

In Focus Commercial Property Information Technology Staff Reporter , Singapore Published: 28 minutes ago Photo from Knight Frank Industrial leasing rises 7.9% in Q2 as big-ticket deals fade AI and semiconductor demand drive 3,199 contracts as investment sales fall 66.2% from Q1.

Industrial leasing activity in Singapore rose 7.9% quarter-on-quarter (QoQ) to 3,199 contracts in the second quarter (Q2) of 2026, according to Knight Frank.Industrial property investment sales fell 66.

2% QoQ and 44.7% year-on-year (YoY) to $1.3b in Q2, whilst the number of transactions fell 8.

5% QoQ and 18.0% YoY to 386.The decline followed $3.

7b in transactions in the first quarter (Q1), when UI Boustead REIT was listed.Deals worth $10m or more fell to 16 in Q2 from 39 in Q1, whilst sub-$10m transactions remained relatively resilient at 370 compared with 383.High-Specs Industrial rents increased 0.

8% QoQ to $3.67 per square foot per month (psf pm), whilst Prime Business Park and General Business Park rents held at $6.28 psf pm and $3.

75 psf pm, respectively."AI and digitalisation reshape occupier requirements, at the same time creating structural demand that underpins both leasing activity and capital values," said Tridiana Ong, Head, Occupier Strategy and Solutions at Knight Frank Singapore.The demand for industrial space comes as Singapore's economy grew 5.

7% YoY in Q2 2026, based on advanced estimates from the Ministry of Trade and Industry.Goods-producing industries grew 10.4%, whilst manufacturing output increased 12.

2%, up from 8.0% in Q1.Knight Frank said continued demand for semiconductors and semiconductor manufacturing equipment supported manufacturing growth, whilst major technology companies continued to invest in AI infrastructure.

The electronics Purchasing Managers' Index (PMI) stood at 52.2 in June, above the overall PMI of 51.3.

The report said companies with expansion needs or those seeking to resist rising rental costs could increasingly look beyond the central business district to alternative locations such as Prime Business Parks.Investment in advanced manufacturing and automation is also supporting demand for industrial facilities. Katoen Natie invested $60m in a new Jurong Island facility, alongside a further $3.

1m commitment to a fully automated storage and retrieval system, amidst disruption to chemical supply chains caused by the conflict in the Middle East.Singapore's maritime sector has committed more than $100m to maritime research and development over the next five years, with a focus on autonomous port operations, smart ships and AI adoption. Siemens also plans to establish a $299m digital factory in Singapore.

Knight Frank expects demand for facilities supporting advanced manufacturing, AI infrastructure, and logistics automation to remain strong as global companies seek safe-haven locations to navigate geopolitical conflicts, political barriers, and trade obstacles.Singapore's fixed asset investment commitments rose 40.9% YoY in Q1 2026, driven by manufacturing.

Electronics commitments increased to $2.2b from $55m 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," the report said.

Knight Frank expects industrial property prices to rise 3% to 5% in 2026, supported by owner-occupier demand and Singapore's position as a regional hub. Industrial rents are forecast to grow 1% to 3% over the year.The report also expects AI and automation adoption to support leasing demand as the impact of expansion by large-scale manufacturers and wider technology adoption filters through to domestic small and medium-sized enterprises.

Follow the link for more news on Knight Frank Chart of the Day Also Read JTC projects 400,000 sq m of new industrial space in H2 Industrial rents rise for 23rd straight quarter Join Singapore Business Review community Your e-mail address A NOTE FROM SINGAPORE BUSINESS REVIEW If you've been wondering whether SBR could work for your company — yes, probably. A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you?

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