How Singapore's slowing manufacturing sector could affect industrial property market

Property prices to increase slightly.

According to Savills, the manufacturing sector is expected to slow in the second half of the year and this could moderate any upside for the industrial property market. Prices of all industrial properties may see smaller increases as sellers lower their expectations.

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Sales activity could also abate as the SSD dampens speculative demand. Rents may see a decline on the back of the oversupply situation. However, well-located and -designed industrial buildings that meet manufacturers’ specifications could continue to command premium rents.

The manufacturing sector picked up in Q2/2013, expanding by 37.6% QoQ, according to the Ministry of Trade and Industry’s estimates, after a 12.7% decline in the previous quarter.

The Singapore Purchasing Manager’s Index (PMI) for April, May and June also scored 50.3, 51.1 and 51.7 respectively, indicating an expansion of the manufacturing sector, with June recording its best performance in two years.

This was due to the increase in new orders and export orders, as well as higher manufacturing output for biomedical and electronic products.