Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers

Industrial property costs and rents in Singapore are expected to moderate this year amid greater supply and weak necessity, according to a February study report by Colliers. The firm is projecting both general yearly industrial rental and rate growth to moderate to in between 0% to 2% in 2025, contrasted to the 3.5% increase chalked up for both in 2024.

According to Colliers, the source of industrial space is anticipated to expand this year, with over 2.5 times the supply last year coming on stream before reducing from 2026 onwards. “This rise in supply has led to the present supply-demand imbalance with sectors of the marketplace now observing upcoming supply with slower precommitments or finished projects with lower occupancy,” the report states.

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The greater supply, integrated with raised caution amongst occupants due to persistently high rate of interest and elevating operating costs, is expected to continue dampening rental improvement.

In the meantime, provided the bump in supply and the forecasted balance in leas, this might be a good year for tenants with more options pertaining to market, claims Colliers. “New commercial growths, outfitted with more modern specifications, can motivate more services to relocate from older, aging production sectors to more recent projects,” says Nicolas Menville, executive director and head of Singapore-based industrial customers for Colliers.

Furthermore, heightened trade protectionism has brought unpredictability right into global markets, potentially affecting service confidence and financial investment decisions.

The price index additionally expanded 0.5% q-o-q in 4Q2024, easing from the 1.2% development in the previous quarter. Last year, industrial property prices rose 2.1%, less than half of the 5.1% raise documented the year prior to.

On the other hand, Colliers expects commercial need to continue to be supported by the semiconductors, logistics and advanced manufacturing sectors. It additionally expects industrial leasing activities to see a progressive ramp-up in time as plans come to be more clear and market views strengthen, underpinned by the continuous recuperation in the chip cycle.

The soft overview happens as JTC’s 4Q2024 information indicated a market place that is “slowing”, claims Colliers. The JTC All Industrial rental index charted a 17th successive quarter of growth in 4Q2024, increasing 0.5% q-o-q and bringing overall development for the year to 3.5%. However, this notes a significant decline from the 8.9% rental growth logged in 2023.


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