SINGAPORE (EDGEPROP) - According to the latest JTC industrial data for 4Q2020, the island wide industrial property market recorded the highest occupancy rate since its last peak in 1Q2016. Overall industrial occupancy rates rose to 89.9% and this follows three consecutive quarterly increases in overall occupancy rates in the sector.
The market also saw industrial property prices and rents climbing last quarter with prices increasing by 1.0% q-o-q and rents climbing 0.1% on a quarterly basis.
“The rise in prices and rents is a reflection of stable demand for industrial space amidst limited new supply in 2020 due to construction delays,” says Brenda Ong, executive director, logistics & industrial at Cushman & Wakefield.
Desmond Sim, head of research, Southeast Asia at CBRE also agrees that construction delays due to the pandemic effects contributed to the rise in overall industrial occupancy rates in 4Q2020. He adds that the rise in occupancy rates primarily stemmed from the warehouse submarket, though occupancy for both factory and warehouse spaces also increase during the period.
According to Ong of Cushman & Wakefield, the industrial sector has benefitted from Covid-19 accelerated trends such as a higher e-commerce adoption rate, and this has spurred demand for prime logistics facilities, while widespread remote working and preparations for 5G adoption have boosted demand for semiconductors and electronics, she says.
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Singapore’s industrial real estate market has also benefitted from an expanding biomedical manufacturing sector which saw output expand rapidly in 2020. On a yearly basis, the electronics and biomedical manufacturing sectors both increased by 11.9% and 23.7% respectively in 2020, says Cushman & Wakefield.
CBRE says that the total upcoming factory supply for 2021 stands at 9.68 mil ss ft with most of the new supply coming from the single-user factory submarket which is expected to inject 5.45 mil sq ft into the market. This is a 0.83 mil sq ft increase from what was previously estimated in Q3 2020, says Sim.
Separately, business park space has also seen stronger demand despite the tougher economic environment in 2020, says Cushman & Wakefield. The latest JTC statistics show that rents in this submarket fell by 1.1% for the whole of 2020, and Ong say that this is the most resilient performance among all the industrial segments.
“The resilience in business park rents could be attributed to city fringe business parks as firms explore new ways of working. The adoption of flexible working arrangements are expected to increase, supporting a flight-to-value trend,” says Ong.
She adds that the rising demand for such spaces are encouraging investors to prowl the market for redevelopment or asset enhancement opportunities in the business park submarket.