| Industrial property prices and rents in Singapore are expected to moderate this year as supply increases and demand weakens, according to a report by Colliers in February. The firm predicts a slow growth rate of 0% to 2% for both overall annual industrial rental and prices in 2025, compared to the 3.5% growth seen last year. The latest JTC data for Q4 2024 showed a market that is losing momentum, with a 17th consecutive quarter of growth for the All Industrial rental index, but at a slower pace of 0.5% quarter-on-quarter (q-o-q), and bringing total growth for the year to 3.5%. This is a significant decline from the 8.9% rental growth reported in 2023. The price index also grew 0.5% q-o-q in Q4 2024, lower than the 1.2% growth in the previous quarter. In 2024, prices rose 2.1%, which is less than half of 5.1% increase in 2022.According to Colliers, the supply of industrial space is expected to increase this year, with 2.5 times more supply than last year entering the market, before tapering off from 2026 onwards. This surge in supply has created an imbalance between supply and demand in certain segments of the market, leading to slower precommitments for upcoming supply and lower occupancy for completed projects. The firm points to the higher supply, combined with caution among occupiers due to high interest rates and rising operating costs, as the cause of the slower rental growth. Additionally, global trade protectionism has caused uncertainty in the market, which may affect business confidence and investment decisions.On the other hand, Colliers believes that the semiconductor, logistics and advanced manufacturing sectors will continue to drive demand for industrial space. It also expects to see a gradual ramp-up in industrial leasing activities as policies become clearer and market sentiments improve. This will be supported by the upturn in the chip cycle. In the short term, with the expected increase in supply and the projected moderation in rents, tenants may benefit from having more options in the market. The firm says that this could be a good year for businesses as newer industrial developments with modern specifications may encourage relocations from older, ageing manufacturing spaces. Nicolas Menville, executive director and head of Singapore-based industrial clients for Colliers, advises that current listings for industrial properties be checked and past transactions be compared in terms of rental and sale prices for a better understanding of the market trends.
A recent research report by Colliers has projected a moderation in Singapore’s industrial property prices and rents this year, due to a combination of higher supply and weaker demand. The firm predicts a growth rate of 0% to 2% in both overall annual rental and price levels for 2025, compared to the 3.5% increase seen in the previous year.
According to Colliers, the latest data from JTC for the fourth quarter of 2024 indicates a market that is “losing steam”. While the All Industrial rental index recorded a 17th consecutive quarter of growth, it only rose by 0.5% quarter-on-quarter (q-o-q) and the total growth for the year was 3.5%, a significant decline from the 8.9% growth in 2023. The price index also saw a q-o-q increase of 0.5% in the fourth quarter, down from 1.2% in the previous quarter. This led to a 2.1% overall increase in industrial property prices last year, less than half of the 5.1% growth seen in 2022.
The report attributes the muted outlook to a surge in industrial space supply this year, which is expected to be 2.5 times higher compared to the previous year. This increase has caused an imbalance between supply and demand, resulting in slower precommitments for upcoming supply and lower occupancy for completed projects. The higher supply, coupled with cautiousness among occupiers due to high interest rates and escalating operating expenses, is expected to continue dampening rental growth. In addition, global trade protectionism has introduced uncertainty to the market, which could impact business confidence and investment decisions.
However, Colliers remains optimistic about the demand for industrial space, particularly in the semiconductors, logistics, and advanced manufacturing sectors. The firm also anticipates a gradual ramp-up in industrial leasing activities as policies become clearer and market sentiments improve, supported by the ongoing upturn in the chip cycle. In the short term, with the expected increase in supply and the projected moderation in rents, this could be a favorable year for tenants with more options available in the market. New industrial developments with modern specifications may also attract businesses to relocate from older, ageing manufacturing spaces.
Nicolas Menville, executive director and head of Singapore-based industrial clients for Colliers, advises individuals to check current listings and compare past transactions in terms of rental and sale prices to better understand market trends.