Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
The consumer price index additionally expanded 0.5% q-o-q in 4Q2024, easing from the 1.2% growth in the past quarter. Last year, industrial real estate prices increased 2.1%, much less than half of the 5.1% raise recorded the year prior to.
The greater supply, incorporated with boosted caution among occupants as a result of constantly high rate of interest and elevating operating costs, is expected to continue dampening rental improvement.
On the other hand, Colliers anticipates industrial demand to continue to be supported by the semiconductors, logistics and advanced production markets. It additionally expects industrial leasing actions to see a steady ramp-up in time as policies become clearer and market positions improve, underpinned by the continuous upturn in the chip cycle.
On top of that, heightened trade protectionism has brought uncertainty into international markets, possibly influencing service confidence and financial investment decisions.
Industrial property prices and leas in Singapore are expected to moderate this year amidst a lot higher supply and weaker demand, according to a February research study record by Colliers. The firm is projecting both overall annual commercial leasing and price growth to moderate to between 0% to 2% in 2025, contrasted to the 3.5% increase chalked up for both in 2024.
The muted outlook happens as JTC’s 4Q2024 data showed 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%. Nevertheless, this notes a significant decline from the 8.9% rental growth visited 2023.
In the meantime, given the bump in supply and the projected restraint in rental fees, this could be a good year for lessees with more alternatives involving market, claims Colliers. “New commercial advancements, outfitted with more modern specifications, can encourage extra businesses to move from older, ageing manufacturing places to more recent jobs,” claims Nicolas Menville, executive manager and head of Singapore-based industrial clients for Colliers.
According to Colliers, the source of commercial sector is anticipated to expand this year, with over 2.5 times the supply last year coming on stream before tapering off from 2026 onwards. “This rise in supply has led to the present supply-demand discrepancy with sections of the market currently seeing upcoming supply with slower precommitments or completed ventures with lower tenancy,” the report states.