Chart of the Day: 2014 industrial supply to exceed more than double of last year

Expect a high influx of new supply in next 4 years.

According to Knight Frank, the industrial sector could expect a high influx of upcoming supply over the next four years, with a total industrial gross floor area (both factories and warehouses) of 64.5 million sq ft.

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Of which, the market could expect 34.7 million sq ft and 23.6 million sq ft of new industrial space in 2014 and 2015 respectively.

The upcoming supply for 2014 and 2015 is significantly higher as compared to the 2013 new supply and 5-year annual average new supply (from 2009 to 2013) of 15.9 million and 12.0 million sq ft of net floor area respectively.

It is almost apparent that the market is entering into a state of oversupply. New annual take-up of 9.3 million sq ft in 2013 is slightly lower than the 5- year (from 2009 to 2013) annual average of New Take-up at 9.9 million sq ft. However, new supply in 2013 has surpassed the average 5-year new supply by 30 per cent.

Unless an economic stimulus benefiting the industrial sector of Singapore takes place, prices and rentals are expected to come under pressure with the current abundance of industrial properties, particularly the factory segment with new supply of 42.8 million sq ft entering the market in 2014 and 2015.