SINGAPORE (EDGEPROP) - Sales and leasing activities in Singapore’s industrial space have picked up by 4.9% y-o-y this past quarter to reach a total of 2,140 leases, according to Knight Frank’s 1Q2022 industrial report. 

See also: Industrial rents up 0.2% in 4Q21, sees best full-year performance in eight years

Strata industrial space was attractive to business due to its digestible price-point and floor areas, while land-plots exceeding 100,000 sq ft remained in demand as end-users looked to larger parcels for expansion, notes Knight Frank.

However, while demand for industrial space remained healthy, leasing momentum slowed. On a q-o-q basis, industrial leases fell 1.4% in 1Q2022. The largest multi-user factory segment saw leases decline by 0.4% y-o-y, although this was partly due to the record number of leases recorded in the previous year. 

Meanwhile, Singapore’s total industrial sales clocked in at $431.2 million in 1Q2022, down 61.8% q-o-q and 71.9% y-o-y respectively. The lower sales were underpinned by the limited supply of good-quality industrial space, says Knight Frank.

Knight Frank cautions that external headwinds are on the horizon for the industrial market. The Russia-Ukraine war is expected to further strain the supply of raw materials for semiconductor chips, potentially affecting industrial growth. In addition, continued Covid-19 lockdowns in China and rising inflationary pressures have dampened manufacturer sentiments. 

Supply of industrial space is also set to increase. Between 2022 and 2026, some 50.8 million sq ft of new industrial gross floor area will be coming on-stream to the sector. This year, 29.9 million sq ft will be completed.

Nonetheless, Knight Frank believes demand will remain healthy. Demand for logistics and warehouse space is expected to stay propped-up by the e-commerce market, while further expansion is anticipated from the biomedical, biotechnology and electronics sectors.

Knight Frank estimates industrial price and rents to grow moderately between 3% and 5% in 2022.