Singapore industrial space rents, prices up in Q4 2021, fewer spaces completed: JTC

INDUSTRIAL developments continued to see delays in Q4 2021, as the 3 months saw total available stock rise by 11,000 square metres (sq m), a sharp drop from the 228,000 sq m in Q3 2021. It is also a mere 1.5 per cent of the 736,000 sq m rise in total available stock for the whole 2021, according to JTC's quarterly market report released on Thursday (Jan 27).

While last year's stock increase is more than double of the 357,000 sq m in 2020, it is still less than the increase of 865,000 sq m in 2019 before the pandemic, JTC noted.

Comparing quarter on quarter, prices of industrial properties gained 1.4 per cent, while rentals rose 0.2 per cent in Q4 2021. This marks the fifth consecutive quarter of marginal growth.

Prices and rents were also up 4.4 per cent and 2 per cent respectively, compared with the previous year.

Occupancy rate has remained unchanged at 90.1 per cent since Q2 2021, but inched up 0.2 percentage points from Q4 2020.

By segment, both multiple-user factories and business parks saw quarter-on-quarter growth in occupancy rates, rising 0.4 per cent and 0.2 per cent respectively. This was offset by single-user factories and warehouses, which slipped 0.1 per cent each.

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During the quarter, JTC allocated a total of 88,000 sq m of ready-built facilities (RBF) space to industrialists, which included 66,900 sq m of high-rise space and 11,500 sq m of land-based factory space.

Total RBF returns in Q4 2021 was 98,100 sq m, of which 52,800 was land-based factory space and 26,700 was high-rise space. According to JTC, about 82 per cent of the total returns were due to natural expiries or companies consolidating their operations.

Looking ahead, the industrial land and infrastructure agency expects further increases in industrial space supply. Based on approved plans at the end of last year, an estimated 2.8 million sq m could be completed by the end of 2022.

Leonard Tay, head of research at Knight Frank Singapore, said: "Knight Frank envisages growth in the industrial sector to continue in 2022, with investment activity likely to be driven by end-users looking for manufacturing facilities for their own use, as well as quality warehouses that boast high-quality specifications that facilitate growing supply chain demand.”

“Should overall recovery and health measures stay on the current trajectory of transitioning into a new norm, then barring any recurring waves of infections or new variants, the transport engineering sector might also turn a corner in 2022 as more borders open and travel volume improves. The healthy demand and expanding activity in the sector will support rent and price increases of between 3 per cent and 5 per cent for the whole of 2022,” Tay added.

Meanwhile, according to Edmund Tie head of research and consulting at Lam Chern Woon, the incoming supply in 2022 will "likely cap the upside of rental growth".

He said: "Despite increasing global Covid-19 vaccination rates and booster vaccination roll-outs as well as the gradual reopening of borders, global growth is expected to soften for 2022 amid concerns over spread of Omicron variant, continue global supply chain bottlenecks and looming inflation costs."

That said, Lam added that the manufacturing and logistics sectors are expected to underpin rental improvements for factory and warehouse spaces this year. 

"We expect rents of industrial space to grow between 2 to 3 per cent for multiple-user factory space in 2022, while hi-tech factory and warehouse spaces will likely see higher rental growth upside of 3 to 5 per cent," Lam added.

Between 2023 and 2025, JTC expects an additional 1.9 million sq m of industrial space to be completed. This amounts to an average annual supply of about 1.2 million sq m from now until the end of 2025.

"As a comparison, the average annual supply and demand of industrial space were both around 0.7 million sq m over the past 3 years," JTC said.