Robust demand saw Singapore’s industrial rents and prices climbed for the eleventh consecutive quarter. This was despite the third successive quarter of contraction in manufacturing output, which deepened from -5.3% y-o-y in 1Q23, to -7.5% y-o-y in 2Q23, according to advance estimates released by the Ministry of Trade and Industry on 14 July 2023.

JTC’s statistics released today showed the all-industrial rental and price indices gained another 2.1% and 1.5% q-o-q, respectively, in 2Q23.

Rent growth in 2Q23 came on the back of a steep expansion in net absorption amounting to 303,000 sqm – the highest in four quarters. This was led by the multiple-user factory and warehouse segments which saw the 2Q23 island-wide multiple-user factory vacancy rate falling to a six-quarter low, and the island-wide warehouse vacancy rate staying at the sub-10% zone for the ninth consecutive quarter.

In the capital markets, investors continued to favour industrial properties due to their positive yield spread against the current high interest rates and future rent growth prospects. Preliminary data collated by JLL Research showed around SGD 811 million worth of industrial properties changed hands in 2Q23, up 47.5% q-o-q.

Looking ahead, we expect investment demand for industrial properties – especially quality assets – to stay elevated, and occupier demand for industrial space to hold firm for the rest of 2023.

Considering the above and given 1H23’s island-wide industrial rent and price growth of 4.9% and 3.1%, respectively, have tracked expectations, we are maintaining our view for island-wide industrial rent growth to surpass the 6.9% attained in 2022, and full-year price growth to moderate to around 5-6%, from 7.5% in 2022. 

Tay Huey Ying, Head of Research and Consultancy, Singapore

郑惠匀, 研究与咨询部主管 (新加坡)