Tay Huey Ying, Head of Research and Consultancy, Singapore

郑惠匀, 研究与咨询部主管 (新加坡) Singapore’s industrial property market posted its best quarterly performance in eight years.

JTC’s statistics released today showed the all-industrial rental index rising 1.0% q-o-q in 1Q22, the fastest since the 4.4% recorded in 3Q13. Meanwhile, the all-industrial property price index surged 2.1% q-o-q in 1Q22, the sharpest since the 3.8% posted in 1Q14.

1Q22 rent growth was led by the warehouse segment which saw its rents rising 1.5% q-o-q mainly on the back of robust demand for ramp-up facilities. In fact, the supply crunch of this asset class has contributed to the islandwide warehouse vacancy rate staying at sub-10% for four consecutive quarters, and demand spilling into cargo lift logistics/warehouse premises. The last time the islandwide warehouse vacancy fell below 10% was in 1Q16. Fulfilment for larger logistics/warehouse space requirements, especially for 100,000 sq ft and above, also remained challenging due to the lack of available options in 1Q22.

We expect occupier demand for industrial space to stay firm for the rest of 2022, supported by growth industries such as the food, electronics, media, e-commerce, technology and life sciences. The global supply chain disruptions and geopolitical tensions could also lead to increased inventory holding and potentially stockpiling of essential items, which could underpin near-term demand for logistics/warehouse space.

Against this demand outlook and given that rents had already risen by 1.0% in 1Q22, full-year 2022 rent growth is expected to surpass the 2.0% clocked in 2021. However, the foreseen surge in new supply could cap full-year rent growth to within 5%. We estimate that more than 2 million sqm of industrial net floor space could be completed in 2022, substantially higher than the 669,000 sqm of net space addition in 2021.

There is also potential for full-year 2022 industrial price growth, which had already appreciated by 2.1% in 1Q22, to exceed 2021’s 4.4% rise, on the back of the rent growth potential and sustained buying demand for industrial assets. However, the rising interest rate outlook could keep full-year price growth in check, possibly to around 5-8% in 2022.

By Tay Huey Ying, Head of Research and Consultancy, Singapore 郑惠匀, 研究与咨询部主管 (新加坡)