Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
The higher supply, combined with enhanced caution among occupiers as a result of persistently high rate of interest and rising operating budget, is expected to continue dampening rental increase.
Additionally, heightened trade protectionism has brought unpredictability right into international markets, potentially impacting service confidence and investment decisions.
The low-key expectation enters as JTC’s 4Q2024 information indicated a market that is “slowing”, states Colliers. The JTC All Industrial rental index charted a 17th successive quarter of growth in 4Q2024, climbing 0.5% q-o-q and bringing complete progress for the year to 3.5%. Nonetheless, this marks a significant decline from the 8.9% rental development logged in 2023.
Industrial property prices and rents in Singapore are anticipated to tone down this year amidst higher supply and weaker necessity, according to a February study report by Colliers. The company is forecasting both overall yearly industrial rentals and rate growth to moderate to in between 0% to 2% in 2025, compared to the 3.5% increase chalked up for both in 2024.
In the meantime, given the bump in supply and the forecasted moderation in leas, this might be a good year for occupants with more options involving market, says Colliers. “New commercial growths, geared up with more modern specs, can urge extra firms to transfer from older, ageing manufacturing offices to more recent ventures,” claims Nicolas Menville, executive director and head of Singapore-based commercial clients for Colliers.
On the flip side, Colliers expects commercial demand to continue to be supported by the semiconductors, logistics and advanced manufacturing industries. It even expects industrial leasing ventures to see a steady ramp-up over time as plans come to be clearer and market positions enhance, underpinned by the continuous upturn in the chip cycle.
The consumer price index also expanded 0.5% q-o-q in 4Q2024, easing from the 1.2% development in the last quarter. Last year, industrial real estate prices rose 2.1%, less than half of the 5.1% rise reported the year before.
According to Colliers, the source of commercial space is expected to swell this year, with over 2.5 times the supply last year coming on stream before lessening from 2026 onwards. “This rise in supply has led to the present supply-demand inequality with segments of the market currently observing upcoming supply with slower precommitments or finished ventures with lower tenancy,” the report states.
