Industrial market continues growth in 2Q2022 based on Ministry of Trade and Industry data

The industrial market has continued to grow across the majority of sectors, as per the Cushman & Wakefield industrial report for 2Q2022 which was released on today (July 4.). In accordance with Ministry of Trade and Industry information, the manufacturing sector increased by 7.1% y-o-y in the second quarter, which made it the largest source of GDP growth during the period.

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Rents for business parks in the suburban and city-fringe regions, along with the rents for factories, were steady. A tight availability as well as low rates of vacancy continue to push up rents in the other industrial segments. Warehouse and logistics rents have seen the highest increase in the second quarterof 2018, rising up by 2% as well as 1.5% q-o-q respectively.

“The trend of a “flight to quality” has driven the growth in rents of factories with high-tech technology, as people are seeking newer industrial offices near city centers to increase retention of talent and brand image,” the report says.

But, as the economy opens and the demand for goods shifts towards leisure and travel, “e-commerce players are adopting the watch-and-wait approach” according to Wong Xian Yang, head of research at Cushman & Wakefield. This is further exacerbated by the current economic uncertainty, Wong adds.

Wong expects the market for industrial properties to sustain an upward trend in rental growth over the longer term, fueled by high-value manufacturing and online space demands. Demand will shift towards more modern facilities that have better specifications, thereby encouraging landlords to upgrade and develop their assets. Capital values are expected to remain steady due to the limited supply of the coming years and industrial stock that is institutional grade.