Lacklustre manufacturing sector prompts slower industrial sales activity in 3Q2023

By Atiqah Mokhtar

/ EdgeProp Singapore |

October 25, 2023 10:11 AM SGT

3Q2023 saw 381 industrial sales transactions, 16.4% lower q-o-q (Picture: Samuel Isaac Chua/The Edge Singapore)

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SINGAPORE (EDGEPROP) - Singapore industrial sales activity slowed in 3Q2023 amid a lacklustre manufacturing sector. According to an October research report by Knight Frank, the third quarter registered 381 industrial sales transactions amounting to $922.7 million, representing a 16.4% q-o-q fall in the number of deals and a 13.9% q-o-q fall in deal value.

The lower sales come on the back of the manufacturing sector contracting by 5% y-o-y in 3Q2023, based on advanced estimates released by the Ministry of Trade and Industry (MTI) in October. In August, MTI had narrowed its forecast for Singapore’s economic growth in 2023 to a range of 0.5% and 1.5%, down from its previous range of 0.5% to 2.5%. In the same month, Singapore’s manufacturing output fell 12.1% y-o-y, according to figures released by the Economic Development Board (EDB) in September.

The lacklustre manufacturing performance has also impacted leasing activity, with leasing volume for multiple-users factories islandwide falling 2.4% q-o-q to 2,461 tenancies in 3Q2023.

However, industrial rents saw an increase, with the median rent for multiple-user factories islandwide climbing 3.7% q-o-q to $2.17 psf per month (psf pm). “Despite the shrinking electronics sector, occupancy levels remain stable without noticeable signs of end-users giving up significant volumes of space,” says Norishikin Khalik, director, occupier strategy and solutions, at Knight Frank Singapore.

While the slowdown in manufacturing has resulted in more muted activity in the industrial real estate sector, the manufacturing sector shows signs of bottoming out, Norishikin adds. On a q-o-q basis, the manufacturing reversed from a 1.5% decline recorded in 2Q2023 to edge up 0.2% in the last quarter.

In addition, the 3Q2023 Business Expectations Survey carried out by the Singapore Department of Statistics showed that business sentiment for the manufacturing sector remained positive for the period of July to December 2023.

Norishikin believes a recovery may be on the horizon. “While not out of the woods yet, there are signs that the outlook by the end of 2023 will be more hopeful for manufacturing than at the start of the year, with early signals that the worst might have passed,” she says.

She also points out that Singapore continues to exhibit strong potential for manufacturing clusters. According to EDB, Singapore received $1.6 billion in fixed asset investment commitments in 2Q2023. While this is 20.4% lower q-o-q and 75.2% lower y-o-y amid ongoing economic uncertainty, several clusters including the biomedical manufacturing and transport engineering clusters received more forward-looking investment commitments, signifying Singapore’s continued appeal among international industrialists.

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