SINGAPORE (April 2024): Property consultancy Colliers predicts that the industrial property market in Singapore will see a slowdown in prices and rents this year due to a surge in supply and weaker demand. In their research report released in February, Colliers projected a modest annual growth rate of 0% to 2% in both industrial rental rates and prices for 2025, a significant decline from the 3.5% growth recorded in 2024.
According to Colliers, the market is already showing signs of slowing down, with the recent data from JTC indicating a loss of momentum. While the official data for 2024 is not yet available, the JTC All Industrial rental index rose by only 0.5% in the last quarter of 2024, marking the 17th consecutive quarter of growth. In comparison, rental rates had increased by 8.9% in 2023, showcasing a notable decrease in growth.
Similarly, the JTC price index also saw a slowdown, growing by only 0.5% in the last quarter of 2024, compared to 1.2% in the previous quarter. For the whole of 2024, industrial property prices rose by 2.1%, which is less than half the increase seen in 2023.
With supply expected to increase significantly this year – more than two times the supply recorded in 2024 – before tapering off in 2026, Colliers projects a continuation of the current imbalance between supply and demand. As a result, segments of the market are already seeing upcoming supply with slower pre-commitments or completed projects with lower occupancy rates.
The abundance of supply, coupled with occupiers exercising caution due to high interest rates and escalating operating expenses, is expected to further dampen rental growth. The ongoing trade protectionism and resulting uncertainty in global markets may also impact business confidence and investment decisions, contributing to the subdued demand.
However, Colliers predicts that the industrial sector will continue to be supported by the semiconductors, logistics, and advanced manufacturing sectors. As policies become clearer and market sentiments improve, industrial leasing activities are also expected to see a gradual ramp-up over time, driven by the ongoing upturn in the chip cycle.
Against this backdrop, Colliers believes that this could be a good year for tenants as they will have more options in the market. With newer developments offering modern facilities, more businesses may consider relocating from older manufacturing spaces to newer projects.
Nicolas Menville, Executive Director and Head of Industrial Clients for Colliers Singapore, noted that the influx of supply and the projected rental moderation could benefit tenants. He believes that the availability of new industrial developments with modern specifications could incentivize businesses to shift from older, ageing spaces to newer, more advanced projects.
For those interested in the industrial property market, Colliers has listed the latest rentals and sale transactions, as well as trends in prices for industrial properties and how they compare to commercial properties.