Prices, rents for industrial spaces rise slightly in Q3: JTC
Price index was up 0.5% while rentals rise 0.3% when compared with Q2 2024
PRICES and rental rates for industrial properties in Singapore increased marginally in the third quarter of 2024 as compared with the quarter before, according to JTC’s latest data released on Thursday (Oct 24).
The price index of industrial properties for Q3 was up 0.5 per cent compared with the prior quarter, and represented a 2 per cent increase from the same period a year ago.
The price growth was markedly higher in the multiple-user factory space segment, up 0.7 per cent from the second quarter of 2024 and 4.5 per cent on a year-on-year (yoy) basis.
In the single-user factory sub-segment, prices edged up a marginal 0.2 per cent quarter on quarter (qoq), but fell 1.1 per cent on the year.
Rentals across all industry properties rose a slight 0.3 per cent from Q2 2024, and by a steeper 5 per cent yoy.
Catherine He, head of research at Colliers, Singapore, noted that while this marked slower qoq growth compared with the 1 per cent registered in Q2 2024, it represented the sixteenth consecutive quarter of growth in the industrial rental space.
A NEWSLETTER FOR YOU
Tuesday, 12 pm
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Multiple-user factory space rentals demonstrated the highest qoq growth at 0.6 per cent, and stood at 5.8 per cent compared with Q3 in the previous year.
On a qoq comparison, single-user factory rentals fell slightly by 0.3 per cent and those for business parks were down 0.2 per cent, even as warehouse rentals held steady.
The yoy percentage difference was most apparent in the warehouse space, where rentals grew 4.2 per cent. Single-user factory and business park rentals also booked on-the-year increases at 3.9 per cent and 2 per cent, respectively.
As Colliers’ He expects warehouse supply to peak in 2025 along with “more pockets of spaces coming into the market”, she believes warehouse occupancy rates and rents will ease further due to the availability of more options.
“Demand for warehouses have weakened this quarter, due to softening demand from third-party logistics providers and companies aiming for more efficient use of space amid financial pressures. This is the result of cautious spending and outlook from businesses and consumers, leading to weaker goods turnover and e-commerce sales,” remarked He.
As at end-September 2024, total industrial stock stood at 52 million square metres. The overall occupancy rate remained unchanged at 89 per cent when compared with a quarter ago, though it stood 10 basis points higher than a year prior.
While Colliers is projecting the overall annual industrial price growth to range from 1 to 3 per cent, and rent growth to come in at 2 to 4 per cent for 2024, Huttons expects prices and rents for industrial spaces in Singapore to potentially grow by 3 to 5 per cent for the year.
Both agencies’ projections represent a moderation from the 5.1 per cent industrial price growth and 8.9 per cent rent growth recorded in 2023.
Lee Sze Teck, senior director of data analytics at Huttons Asia, nonetheless believes the recent growth in Singapore’s manufacturing sector will boost economic numbers going forward and also bodes well for the industrial market.
“The cut in interest rate in September 2024 may lead to more transactions in the strata industrial market as the net return on investment will improve,” he added.
This sentiment is echoed by Cushman and Wakefield’s executive director for logistics and industrial, Brenda Ong, though she noted that leasing and buying demand amid declining interest rates might eventuate over 2025.
Despite noting “good demand for sustainable and modern developments” over the latest quarter, she believes new leasing demand was weighed down by capital expenditure (capex) constraints faced by many occupiers.
This comes as large occupiers remain cost-conscious and thus prefer renewing their leases over relocation, she said, with transactions coming in at just up to 10,000 square feet and primarily taking place due to flight-to-quality reasons.
“Fitted units are also highly sought after as tenants can save capex on renovation,” observed Ong.
Copyright SPH Media. All rights reserved.
