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

Industrial property prices and rental fees in Singapore are expected to tone down this year amidst a lot higher supply and weak demand, according to a February study record by Colliers. The company is forecasting both total annual commercial leasing and price growth to moderate to between 0% to 2% in 2025, compared to the 3.5% growth chalked up for both last year.

On the other hand, Colliers anticipates industrial need to continue to be supported by the semiconductors, logistics and advanced manufacturing sectors. It also expects industrial leasing activities to see a gradual ramp-up over time as plans become more clear and market views improve, underpinned by the ongoing recuperation in the chip cycle.

According to Colliers, the source of industrial spot is anticipated to expand this year, with over 2.5 times the supply in 2024 coming on stream prior to lessening from 2026 onwards. “This rise in supply has actually caused today supply-demand imbalance with sectors of the marketplace now seeing upcoming supply with slower precommitments or completed ventures with lower tenancy,” the report states.

The price index also grew 0.5% q-o-q in 4Q2024, easing from the 1.2% development in the past quarter. Last year, industrial real estate prices rose 2.1%, less than half of the 5.1% increase documented the year before.

In addition, increased trade protectionism has actually brought uncertainty into international markets, potentially influencing company confidence and investment decisions.

The low-key expectation enters as JTC’s 4Q2024 data showed a market that is “losing steam”, says Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of development in 4Q2024, climbing 0.5% q-o-q and bringing overall progress for the year to 3.5%. Nevertheless, this marks a significant decline from the 8.9% rental development visited 2023.

In the meantime, given the bump in supply and the projected restraint in rental fees, this might be a good year for occupants with even more options involving market, claims Colliers. “New commercial advancements, geared up with more modern requirements, might encourage much more businesses to move from older, ageing production sectors to more recent jobs,” states Nicolas Menville, executive manager and head of Singapore-based commercial clients for Colliers.

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The greater supply, integrated with increased caution amongst tenants due to constantly high interest rates and escalating operating costs, is anticipated to continue dampening rental increase.


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