Singapore Industrial Rents and Prices Grow for 11th Straight Quarter

Rents and prices in Singapore’s industrial property market rose for an 11th consecutive quarter during the April-June period despite softness in trade indicators, according to Colliers.

The rental index climbed 2.1 percent, decelerating from a 2.8 percent increase in the first quarter, while the price index rose a further 1.5 percent after a similar pace of growth in the prior quarter, the consultancy said in its Singapore Industrial Market Report.

The gains hoisted the price index to its highest level since the first quarter of 2015 and the rental index to its loftiest since the first quarter of 2016, Colliers said Monday in a release.

“Despite prolonged uncertainty in the macroeconomic environment, demand for industrial assets by corporations in the logistics, biomedical, and semiconductor segments remains resilient,” said Lynus Pook, head of industrial services for Singapore at Colliers. “This trend is expected to continue, given Singapore’s attractive location and status as a regional hub.”

More Supply Coming

Higher supply is expected to moderate rental and price growth, with a remaining supply of 6.7 million square feet (622,450 square metres) during 2023 and an average of 10.5 million square feet from the present until 2025. By comparison, net absorption averaged 7.7 million square feet from 2021 to the present.

Nevertheless, demand for higher-specification assets will continue to support the industrial market, underpinned by demand from sectors such as advanced manufacturing, logistics, biomedical and food, Colliers said.

Rents at high-spec industrial properties in the second quarter averaged S$3.34 ($2.46) per square foot per month, up 3.7 percent year-on-year.

Monthly warehouse rents averaged S$1.58 per square foot, up 5.7 percent from a year earlier, while business park rents averaged S$3.69, edging up 0.2 percent.

Vacancy Eases

Vacancy at industrial properties in the city-state fell 0.3 points to 10.9 percent in the second quarter amid strong demand from the warehouse and multi-user factory segments. Capital values were flat at S$209 per square foot, due to a lack of transactions during the period.

Industrial indicators such as manufacturing output exhibited their eighth consecutive month of contraction during the second quarter, and the purchasing managers index saw its fourth straight month of contraction. Colliers attributed the skid to an extended slowdown in the semiconductor cycle, coupled with macroeconomic uncertainties and prolonged elevation of interest rates.

“The external environment is set to remain a key source of weakness for some time, with further export softness ahead, which may serve to slow both rental and price growth in the coming quarters,” said Catherine He, head of Singapore research at Colliers.