According to a market report by Colliers, the local industrial rental and price indices marked their 11th consecutive quarter of growth in 2Q2023. The rental index increased 2.1% q-o-q, slowing down from the 2.8% q-o-q growth recorded in 1Q2023. Similarly, the price index increased 1.5% q-o-q in 2Q2023, mirroring the performance in the previous quarter.
The industrial sector overcame softening trade indicators such as continuous contractions in recorded manufacturing output, non-oil domestic exports (NODX), and purchasing managers index (PMI).
However, the pipeline of upcoming industrial supply remains strong as previously backlogged development completions gradually come on stream in 2H2023. According to Colliers, this was already having an effect in 1H2023 when new supply outpaced new demand and contributed to lower occupancy levels.
Read also: Industrial rents, prices rose for 13th straight quarter in 4Q2023
The rest of this year will see another 6.7 million sq ft of industrial space coming online. Over the next two years, until 2025, the market will see an average of 10.5 million sq ft being added to the market. This will have the effect of moderating rents and price growth, says Lynus Pook, head of industrial services, Singapore, at Colliers.
“Despite prolonged uncertainty in the macroeconomic environment, demand for industrial assets by corporations in the logistics, biomedical, and semiconductor segments remains resilient. This trend is expected to continue, given Singapore’s attractive location and status as a regional hub,” he says.
Demand for higher-specification industrial assets, such as high-spec warehouses and multi-user factories, will continue to support the industrial market. Demand will continue to be propped up from companies engaged in advanced manufacturing, logistics, biomedical, and food production, says Pook.
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