Industrial rents increased seventh consecutive period of growth of 1.5% q-o-q in 2Q2022

Industrial rents increased 1.5% q-o-q in 2Q2022 compared to the 1% Q-o-Q growth that was recorded in during the prior quarter, according to figures published from JTC the 28th of July. This is the, and also the highest quarterly growth rate since 3Q2013. Based on a y-o-y perspective rents increased 3.4% during the second quarter.

Copen Grand completion date under a partnership with MCL Land, after submitting a winning bid of $400,318,000.

Industrial prices also increased in 2Q2022 and grew 1.5% q-o-q in 2Q2022 however, they slowed down away from 3.1% q-o-q surge recorded in the prior quarter. The industrial occupancy rate increased to 89.8% in 1Q2022 to 90% in 2Q2022.

The increase in industrial price and rental indexes was aided by the growth in manufacturing outputs in precision engineering and electronics as well as the enduring demands for semiconductors according to Leonard Tay, head of research at Knight Frank Singapore.
He also says that the growing concerns about the security of food and accessibility to essential raw materials and supplies led to massive stockpiling that boosted the demand for warehouses. “The increasing strength of the Singapore dollar has helped to support stockpiling, reducing the risk of escalating costs as inflation grows more important,” he remarks.

Warehouses had the best performance of all industrial sub-segments. It recorded an increase in rental by 2.1% q-o-q and 5.7% year-over-year in the 2Q2022. In the 2Q2022 the occupancy of warehouses were up by 90.9%, up from 90.3% in 1Q2022.

For factories, multiple-user facilities experienced the highest quarterly as well as annual growth rates in 2Q2022 of 2.1% and 3.7% respectively. “This can be explained by the rising demand for high-spec multi-user facilities, as occupiers are looking for industrial office locations near the city’s edge,” notes Catherine He who is the head of research for Singapore in Colliers.

Looking towards the future, Tricia Song, CBRE director of research for Singapore as well as Southeast Asia, notes that industrial pipelines are “extremely thin” and multi-factory pipelines are scheduled to shrink by 2023. However, the bulk of warehouse inventory up to 2023 has already been fully committed.

In this regard in that regard, the market for industrial real estate will benefit from the low supply. “Barring any sudden recession in global economic growth, the demand for industrial space by 2022 is anticipated to be high and occupancy should remain steady,” Song adds.

Colliers On the contrary, argues the fact that new supplies is expected to be on the market with an average of 1.2 million sqm per year through 2025, with 1.6 million square metres that will be finished this year. This is more than what was the 0.7 million sqm average of the last three years, suggesting that supply is expected to increase to meet demand and limit the pace of price and rental increase, she says.

But, he says that the demand for long-term industrial space will continue to be caused by tailwinds, such as Singapore’s growing emphasis on high-value manufacturing as well as biomedical and medical sectors. Colliers anticipates that industrial rents to increase by two% up to% during the year and industrial prices are projected to increase by five% up to 7%.