Industrial rents grew 1.5% q-o-q in 2Q2022 up with 1% growth from the previous quarter

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

A joint venture between GuocoLand, Leong Holdings and TID for Lentor Hills Residences price at S$585.6 million, equivalent to S$1 060 per square foot per plot ratio (psf ppr).

Industrial prices also increased in 2Q2022 and grew 1.5% q-o-q in 2Q2022 but slowing away from 3.1% q-o-q surge recorded in the previous quarter. In addition, the rate of industrial occupancy rose by 89.8% in 1Q2022 to 90% in 2Q2022.

The rise in industrial prices and rental indexes was helped 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 explains that growing worries about the security of food and accessibility to basic materials and other necessities resulted in a significant stockpiling effort that boosted demands for storage facilities. “The rising Singapore dollar has helped to support stockpiling and helped to limit the increase in prices as inflation becomes more important,” he remarks.

Warehouses had the best performance of all industrial sub-segments. They 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 rose from 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 could be due to the increasing demand for high-spec multi-user factoriesas people are looking for industrial office areas near to the city’s fringe,” notes Catherine He who is the head of research for Singapore for Colliers.

Looking towards the future, Tricia Song, CBRE head of researchfor Singapore as well as Southeast Asia, notes that industrial pipelines remain “extremely thin” and multi-factory pipelines are scheduled to shrink by 2023, while the vast majority of warehouse inventory up to 2023 is already pre-committed.

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

Colliers The contrary, argues that new construction will be coming on stream in the amount of 1.2 million sqm per year through 2025, with 1.6 million square metres to be completed in the year. This is higher than what was the 0.7 million sqm per year average for the last three years, suggesting that the supply will keep pace with demand and slow the rate of price and rental increase, she says.

However, he notes that the long-term demand for industrial space will continue to be caused by tailwinds, such as Singapore’s growing concentration on high-value manufacturing and biomedical and medical sectors. Colliers estimates that industrial rents to increase from two% up to% in the coming year and industrial prices are projected to increase from 5-% up to 7%.