Leading diversified professional services and investment management firm Colliers (NASDAQ and TSX: CIGI) has today released its a publication that interprets the latest quarterly trends in the Singapore industrial market.

Report Highlights 

In Q1 2023, the industrial rental and price indices continued their tenth consecutive quarter of growth. The rental index rose by 2.8% QOQ, accelerating from 2.1% QOQ in the previous quarter, and marking the strongest quarterly growth since Q3 2013. Similarly, industrial prices rose by 1.5% QOQ, slowing slightly from the 1.7% QOQ registered last quarter.

With a remaining supply of 10.3 million sq ft in 2023, and an average of 10.9 million sq ft from present till 2025, higher supply will continue to moderate rental and price growth but may also provide more options for occupiers.

Trade tensions have resulted in industry players looking to fortify supply chains, with some looking to set up shop in Singapore, which will continue to prop up industrial demand.

Singapore industrial rents and prices see continued momentum

In Q1 2023, The JTC All Industrial price and rental indices continued their tenth consecutive quarter of growth in Q1 2023, reaching their highest levels since Q2 2016 and Q4 2015 respectively. However, trade indicators remain soft, with continuous contractions recorded in manufacturing output, NODX and PMI.

Colliers Industrial Rents

*Average of upper and lower floor rents

Source: JTC, Colliers

Michael Bowens, Head of Industrial, Asia commented: " Despite an unfavourable economic climate, industrial rents and prices have shown robust growth momentum. However, with supply playing catch up, tenants may get more options and relief as prices and rents soften. Notably, prime logistics might be an exception to the case with tight supply and resilient demand.”

New completions and robust supply pipeline may provide more options for occupiers

As the backlogged industrial supply pipeline comes on stream this year, new supply was observed to outpace new demand and lower occupancy levels. In addition to 10.3 million sq ft more industrial space scheduled to complete this year, the average annual pipeline supply from present to 2025 at 10.9 million sq ft is markedly higher than the 8.4 million sq ft over the past three years. This anticipated surge in supply could slow price and rental growth, while providing more options for industrialists at the same time.

Upcoming Industrial Supply

Source: JTC, Colliers

Lynus Pook, Head of Industrial Services, Singapore commented: “Persistent growth in industrial rents has attracted investors looking for higher yields, propping up demand. This trend may abate as indicators point to a manufacturing slowdown, amidst a significant influx of supply. Nevertheless, in the search for stability, quality assets will continue to draw demand.

Demand for industrial assets, especially high specification warehouses and multi-user factories to be underpinned by growth industries and structural trends.

Nevertheless, demand for industrial assets, especially high specification warehouses and business parks, should still be underpinned by demand from industries such as the advanced manufacturing, logistics, biomedical, and food sectors. Trade tensions have also resulted in industry players looking to fortify supply chains, with some looking to set up shop in Singapore, which will help to prop up industrial demand.

Catherine He, Head of Research, Singapore added: “As consumers shift their spending from goods to services, e-commerce players are experiencing softer demand. Together with a weaker industrial outlook and higher industrial supply coming on stream, these factors may act as speed bumps to slow down rental and price growth in the coming quarters.”