According to a report by Colliers in February, the prices and rents of industrial properties in Singapore are expected to moderate this year due to an increase in supply and weaker demand. The firm predicts that the overall annual rental and price growth for industrial properties will slow down to between 0% to 2% in 2025, compared to the 3.5% growth in 2024.
Colliers notes that the latest data from JTC for the fourth quarter of 2024 shows that the market is starting to lose momentum. The JTC All Industrial rental index recorded its 17th consecutive quarter of growth, increasing by 0.5% compared to the previous quarter. However, this is a significant drop from the 8.9% growth recorded in 2023. The price index also grew by 0.5% in the fourth quarter of 2024, a decrease from the 1.2% growth in the previous quarter. In 2024, industrial property prices rose by 2.1%, which is less than half of the 5.1% increase in 2023.
Colliers predicts that the supply of industrial space will increase this year, with more than double the supply in 2024 before slowing down from 2026 onwards. This surge in supply has resulted in an imbalance between supply and demand, with some segments of the market seeing slower commitments or lower occupancy in completed projects. The report also states that the higher supply and cautious attitude among occupiers, due to high interest rates and rising operating expenses, will continue to dampen rental growth. Additionally, concerns over trade protectionism have brought uncertainty to the global market, potentially affecting business confidence and investment decisions.
On the positive side, Colliers expects demand for industrial properties to be driven by the semiconductor, logistics, and advanced manufacturing sectors. It also predicts that industrial leasing activities will gradually increase as policies become clearer and market sentiments improve, supported by the ongoing upturn in the chip cycle.
However, with the increase in supply and the projected slowdown in rental growth, this could be a good year for tenants with more options in the market. According to Colliers, new industrial developments with modern specifications may entice businesses to relocate from older spaces to newer projects. Nicolas Menville, Executive Director and Head of Industrial Clients for Colliers, believes that the increase in supply could lead to a shift in the market as businesses look for more modern spaces. To find out more about industrial properties, you can check out the latest listings and past transactions.
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