Singapore industrial rents down 0.7% QoQ in Q2
This marks the slowest quarterly growth since Q1 2022.
The JTC All Industrial Rental Index rose by 1% quarter-on-quarter (QoQ) in Q2 2024, down from 1.7% in Q1. This is the slowest quarterly growth since Q1 2022 and the 15th consecutive quarter of rental increases.
In addition, prices increased 1.2% QoQ after the 0.2% decrease in Q1.
Business park rental growth declined 0.1%, whilst multiple and single-user factories drove overall industrial rental growth at 1.5% and 1.3% QoQ, respectively.
“Performance for business parks held steady in H1 2024. That said, business park rents are expected to face increased pressure in the latter half of the year. This pressure will stem from rising vacancies contributed by non-renewals on lease expiry in specific buildings,” Tricia Song, CBRE Head of Research for Southeast Asia said.
“Furthermore, a higher volume of completions in H2 2024 – 2025 will add to a more competitive leasing environment. Prevailing economic challenges, high-cost environment, and continued work-from-home measures will also continue to dilute space requirements of occupiers,” Song added.
Meanwhile, warehouse rents increased by 0.5% down from 2.0% QoQ whilst the occupancy rate increased by 0.2 percentage points (ppt) to 91.3% with the absence of major warehouse completion.
As of June, 8.5 million sq. ft. of new industrial space (or around 1.5% of total stock) is scheduled for completion in H2 2024. Of the upcoming supply, single-user factories make up 70%, followed by business parks (15%), warehouses (11%), and multi-user factories (4%).
“Leasing demand is expected to pick up in tandem with an improving manufacturing sector and a pickup in sentiments. However, rental growth is expected to moderate in light of occupier cost sensitivity and pressure from the incoming supply. There have also been more renewals and consolidations than relocations or expansions, signaling the financial constraints occupiers are facing,” Catherine He, Head of Research at Colliers Singapore, said.
“Singapore continues to attract international firms looking to establish a secure base of operations or to expand, drawn by a skilled workforce and strategic location in the Southeast Asian market,” Leonard Tay, Head of Research at Knight Frank said.