Despite concerns in the manufacturing sector, stability appears to be on the horizon for the industrial property market, as revealed by the latest data from Singapore Business Review. In the second quarter of 2023, demand and rental rates continued their upward trajectory, defying the odds.
According to JTC’s data, the demand for industrial space surged by an impressive 303,000 square meters, outpacing the supply of 166,000 square meters during the same period. Notably, the occupancy rate for industrial properties in Q2 2023 experienced a modest but significant increase of 0.3%, with the multi-user segment registering the most robust growth at 132,000 square meters.
However, the manufacturing sector in Singapore continued to grapple with contraction throughout the year. In spite of this challenging backdrop, Knight Frank expressed optimism regarding the stability of various industrial property types in Singapore for the remainder of the year.
“Prices and rents in 2023 first six months have already exhibited remarkable strength, surging by 3.1% and 4.9%, respectively. These figures have surpassed Knight Frank’s initial projections of 1% to 3% for the entire year,” declared Knight Frank. The property firm anticipates that industrial property prices and rents will maintain their steadiness for the rest of the year.
One key aspect contributing to Singapore’s resilience is its attractiveness to international firms seeking to expand their manufacturing operations. This allure stems from the market’s pool of talent, proximity to Southeast Asian market, political and legal stability, a plethora of free trade agreements with many countries, and a government-led emphasis on sustainability.
Some industrialists may seize the opportunity to expand their operations in anticipation of future demand. “In the second half of 2023, approximately 0.6 million square meters of industrial space are expected to be completed. Notably, the majority of this supply consists of single-user factory space, while multi-user supply remains limited,” the company reported.
Additionally, Huttons highlighted an uptick in sales of strata industrial units during Q2 2023, which may be attributed to cooling measures implemented in the residential sector in April 2023. Among the notable transactions was the sale of a freehold 5,457 square feet strata unit at Delta House, which fetched a substantial quantum of $6.9 million. Investors also displayed interest in strata food factory units, betting on the robust growth potential of the food industry.
Despite challenges in the manufacturing sector, the industrial property market in Singapore appears poised for stability and growth in the coming months, driven by strong demand, steady prices, and Singapore’s allure for international businesses looking to expand their operations
