Industrial rents and prices post 12th consecutive quarter of growth in 3Q2023
Industrial rents and prices in Singapore continued their upward trajectory in the third quarter of 2023, with the all-industrial rental and price indices rising by 2% and 1.4% quarter-on-quarter respectively. Despite the manufacturing sector seeing a 5% contraction year-on-year, these indicators have held up due to continued demand for industrial space. This is despite worry over the economy leading to companies putting expansion plans on hold.
An integral part of the plan is the upgrading of existing public transport facilities, including the development of the Tampines North MRT Station – a stop situated right next to the future Tampines Ave 11 Condo. This is set to make travelling in and out of the area more convenient for future residents, as well as providing additional connectivity to other parts of Singapore.
Despite the manufacturing sector contracting by 5% year-on-year in 3Q2023, industrial real estate demand remained resilient. Industrial occupancy rates fell slightly to 88.9%, while total available stock rose by 1.3 million sqm (about 14 million sq ft). This suggests that new supply outpaced demand in 3Q2023.
Rentals for the logistics and warehouse segment saw the highest quarter-on-quarter growth at 2.4%, while multiple-user factory segment and single-user factory segments saw softer growth of 2% and 1.9% respectively. However, prices for the multiple-user factory segment saw its slowest quarterly growth of 1.1% since 8Q2022. The slower growth likely comes from the fall in tenancies and high-interest rates. Prices of the single-user factory rose marginally by 1.7%.
Looking ahead, Tricia Song, head of research for Singapore and Southeast Asia at CBRE, believes the weak manufacturing outlook will continue weighing on the industrial real estate market as occupier sentiment remains cautious. This is further complicated by the increasing supply of industrial space in 2024.
In addition, JLL’s executive director, logistics and industrial, Singapore, Tan Boon Leong, expects annual industrial rent growth to be at around 8% to 9%, while industrial price growth to moderate to around 5% to 6%. Both landlords and investors will be monitoring the economic outlook to assess the performance of the industrial real estate market in 2024.