Prices, rents of Singapore industrial spaces rise for 7th straight quarter: JTC

PRICES and rents of Singapore industrial spaces continued to climb for the seventh straight quarter in Q2. Meanwhile, occupancy rates crept up in the quarter after dipping in Q1, according to JTC’s quarterly market report released on Thursday (Jul 28).

Singapore’s strong manufacturing performance, particularly in the electronics and precision engineering segments, helped drive demand for factories during the period, noted property analysts.

The strengthening Singapore dollar also supported stockpiling activity amid rising global concerns over food security and access to raw materials, boosting demand for logistics – hence warehouse – space, said Knight Frank Singapore head of research Leonard Tay.

According to JTC, the prices of industrial developments rose 1.5 per cent quarter on quarter and 5.2 per cent year on year. Multiple-user and single-user factory prices continued to trend upwards, gaining 1.7 and 1.2 per cent respectively on the quarter and 5.5 and 4.8 per cent respectively on the year.

Rents were 1.5 per cent higher on the quarter and up 3.4 per cent on the year. Multiple-user factories and warehouses each saw a 2.1 per cent quarter-on-quarter increase in rents, while singer-user factories and business parks edged up 0.4 and 0.2 per cent respectively.

Year on year, warehouses registered the highest rental increase of 5.7 per cent, while multiple-user factory rents rose by 3.7 per cent. Single-user factory rents were up 2.1 per cent, while business park rents dipped 0.1 per cent.

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Edmund Tie head of research and consulting Lam Chern Woon noted that the demand-supply dynamics for multiple-user factories and business parks remain balanced. The pressure is more prevalent in the warehouse segment, which could cap the growth of rents for this sector.

Rental performance has also been varied across different warehouses depending on their location and specifications, said Colliers Singapore head of research Catherine He. Prime logistics warehouses, for example, have low vacancy rates and high pre-commitment rates for upcoming supply.

Overall occupancy was up 0.2 per cent on the quarter as new demand for multiple-user factories and warehouses outstripped supply, JTC said. Year on year, however, occupancy was down 0.2 per cent as previously delayed completions came on stream in recent quarters.

As at end-June, there were 51.3 million square metres (sq m) of industrial space available. Transaction volume was up 36 per cent year on year, according to estimates based on caveats lodged for industrial properties.

Total available stock rose 322,000 sq m in the second quarter compared with the previous quarter, which saw a stock increase of 333,000 sq m. JTC noted that the 655,000 sq m increase in available space in the first half of 2022 was the most significant half-yearly increase since 2017.

In Q2, JTC allocated 207,200 sq m of ready-built facilities (RBF) space to industrialists. This included 118,100 sq m of land-based factory space and 77,100 sq m of high-rise space. JTC’s newer developments like JTC Space @ Tuas and JTC Logistics Hub @ Gul were among the high-rise space allocated.

Total RBF returns stood at 75,900 sq m, of which 45,800 sq m was for land-based factory space, while 23,100 sq m was for high-rise space. JTC said that 74 per cent of total returns were due to natural expiries or companies consolidating their operations.

JTC expects around 1.6 million sq m of new industrial space to hit the market in the second half of 2022. Some 43 per cent of the new supply will be from single-user factory spaces, 30 per cent from multiple-user factory spaces and 27 per cent from warehouse and business park spaces.

It also expects around 2.7 million sq m of industrial space to be completed between 2023 and 2025, which translates to an average annual supply of around 1.2 million sq m from now until the end of 2025. The average annual supply and demand for industrial space was around 700,000 sq m over the past 3 years, JTC added.

Looking ahead, CBRE head of research for Singapore and South-east Asia Tricia Song noted that the industrial pipeline remains “extremely thin”. Aside from delays that have been carried over to 2022, multi-user factory pipeline is expected to taper down significantly from 2023, she added.

Although there is some warehouse pipeline in 2022 and 2023, Song said most prime warehouses have been fully pre-committed. Beyond 2023, there is almost no sizeable warehouse supply available.

As for the business parks segment, which has a limited supply pipeline, Lam expects rents in the central region to rise by up to 4 per cent this year as the office market recovers.