Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
Industrial property rates and rental fees in Singapore are expected to tone down this year amid greater supply and weaker necessity, according to a February study report by Colliers. The company is projecting both general annual industrial rental and cost buildup to moderate to in between 0% to 2% in 2025, compared to the 3.5% increase chalked up for both in 2024.
On top of that, enhanced trade protectionism has brought skepticism right into worldwide markets, possibly influencing company confidence and financial investment decisions.
On the other hand, Colliers expects industrial need to continue to be sustained by the semiconductors, logistics and advanced manufacturing sectors. It also expects industrial leasing ventures to see a gradual ramp-up over time as plans become clearer and market views enhance, underpinned by the recurring upturn in the chip cycle.
The higher supply, combined with increased caution among occupants because of persistently high rate of interest and rising business expenses, is anticipated to continue dampening rental improvement.
The low-key overview comes as JTC’s 4Q2024 information indicated a market that is “losing steam”, states Colliers. The JTC All Industrial rental index charted a 17th constant quarter of development in 4Q2024, climbing 0.5% q-o-q and bringing overall development for the year to 3.5%. Nonetheless, this notes a substantial decrease from the 8.9% rental development visited 2023.
According to Colliers, the source of commercial space is anticipated to swell this year, with over 2.5 times the supply last year coming on stream prior to tapering off from 2026 onwards. “This upsurge in supply has actually led to today supply-demand imbalance with segments of the market currently observing upcoming supply with slower precommitments or finished ventures with lower tenancy,” the record states.
The price index additionally grew 0.5% q-o-q in 4Q2024, easing from the 1.2% development in the last quarter. Last year, industrial property costs rose 2.1%, less than half of the 5.1% increase recorded the year before.
In the meantime, provided the bump in supply and the projected moderation in rents, this might be a good year for tenants with more choices involving market, says Colliers. “New industrial developments, outfitted with even more modern specs, could encourage much more companies to move from older, aging manufacturing spaces to more recent jobs,” claims Nicolas Menville, executive manager and head of Singapore-based commercial clients for Colliers.
