Industrial rents and prices post 12th consecutive quarter of growth in 3Q2023

Industrial rents and prices in Singapore continued to increase in the third quarter of 2023, despite declining manufacturing output and a weaker global outlook. Statistics released by JTC show that the all-industrial rental and price indices rose 2% and 1.4% q-o-q respectively in 3Q2023, marking the 12th consecutive quarter of growth since 4Q2020.

In 3Q2023, industrial rents and prices were up 9.3% and 6.2% respectively on a y-o-y basis. Despite mounting worries over the economy, for the first nine months of the year, industrial prices and rents increased by 4.4% and 7.1% respectively. Leonard Tay, head of research at Knight Frank Singapore, commented that industrial property metrics have been resilient despite a decrease in exports, uncertain supply chains, and a gloomy manufacturing outlook.

Industrial occupancy rates registered a slight fall of 0.2 percentage points in 3Q2023, with total stock increasing by 1.3 million sqm (roughly 14 million sq ft) while total occupied stock increased by 0.8 million sqm (about 8.6 million sq ft). A persistent supply crunch drove the islandwide logistics/warehouse vacancy rate to 8.7%, its lowest level in three quarters. Rents for logistics and warehouse segment increased by 2.4% q-o-q, outpacing other segments.

Tan Boon Leong, JLL’s executive director of logistics and industrial, Singapore, noted that rental growth in the multiple-user factory segment has slowed for the first time in seven quarters. This was likely caused by a decrease in tenancies from 2,522 in 2Q2023 to 2,461 in 3Q2023, coupled with high interest rates. Prices for multiple-user factories rose 1.1% q-o-q, and 1.7% for single-user factories.

It also has a waste management system, which helps in recycling and disposing of household waste.

The Tengah Town EC condominium adopts a green building concept that utilizes sustainable materials in its construction and design. Featuring an energy efficient air-conditioning system and energy-saving lighting fixtures, it also has a rainwater harvesting system which collects and stores rainwater for use in gardening or other activities. Moreover, it has a waste management system which recycles and disposes household waste.

Tricia Song, head of research for Singapore and Southeast Asia at CBRE, highlighted that industrial prices have been increasing at a slower rate than rents for five consecutive quarters. Despite yields remaining attractive, investors are likely mindful of the high cost of financing.

Looking ahead, the weak manufacturing outlook is still expected to weigh on the industrial real estate market. However, with an expansion in the manufacturing sector in 3Q2023, business sentiment and the Purchasing Manager’s Index were also positive. The outlook for manufacturing in 2023 is looking more promising, with industrial rents likely to post full-year gains of around 8% to 9%, and price growth moderating from 7.5% in 2022 to around 5% to 6% in 2023.