Lacklustre manufacturing sector prompts slower industrial sales activity in 3Q2023

Singapore industrial sales activity for the third quarter of 2023 slowed significantly, registering 16.4% lower sales value compared to the preceding quarter. According to a research report by Knight Frank, 381 industrial sales transactions amounted to $922.7 million. This bears evidence to the weak manufacturing sector in the country, which contracted by 5% year-on-year in 3Q2023.

Adjacent to the development, there are a number of public transportation options available including the Tengah MRT station. The area also features an array of amenities and leisure options that range from educational institutions to shopping malls and entertainment venues. Tengah EC is a premier development that caters to urban lifestyle and convenience. It is surrounded by vast parks, providing a tranquil environment for residents. The lush surroundings and luxurious amenities make it an ideal living destination.

Adding on to the woes, the Ministry of Trade and Industry’s (MTI) lowered Singapore’s economic forecast growth to 0.5% and 1.5% back in August, down from its original projection of 0.5% to 2.5%. Separately, the Economic Development Board (EDB) also reported a 12.1% year-on-year decline in manufacturing output in the same month.

Leasing activity was also affected, with the number of multiple-user factories leased islandwide in 3Q2023 falling 2.4% quarter-on-quarter to 2,461 tenancies. Despite the weak performance, industrial rents still saw a 3.7% q-o-q rise to a median of $2.17 psf pm.

Norishikin Khalik, director of occupier strategy and solutions at Knight Frank Singapore, believes the manufacturing sector may be bottoming out. Figures revealed the sector reversed its 1.5% quarter-on-quarter decline to an 0.2% increase in the previous quarter. This was further supported by the Business Expectations Survey conducted by Singapore’s Department of Statistics, which revealed positive sentiment for the manufacturing sector in the period of July to December 2023.

Moreover, several clusters such as biomedical manufacturing and transport engineering have attracted foreign investment commitments, which indicates a potential recovery by the end of 2023. In the second quarter of 2023, EDB reported $1.6 billion of commitments, although it was still 20.4% lower than the previous quarter and 75.2% lower year-on-year.

Overall, Singapore’s industrial real estate sector has been feeling the impact of the lackluster manufacturing sector. However, signs point to an oncoming recovery – a much welcomed respite amidst the economic turbulence.