Industrial dealmaking and leasing activity slows in Q1: report

Rents, prices to rise 3% to 5% this year.

Dealmaking and leasing activity in Singapore’s industrial property sector softened last quarter, but improving manufacturing conditions and potential interest rate cut news could lift the market for the rest of 2024, according to Knight Frank.

In its latest report, Knight Frank data showed the volume of caveats lodged for industrial properties went down 21% QoQ to 335 caveats last quarter. This is equivalent to $709.7m in overall sales, up 1% from the previous three months but 25% down year-on-year.

Leasing also slipped 6.5% QoQ to 2,948 transactions in the first quarter, with the value of rental transactions settling at $28.5m. Early statistics suggest rental rates of industrial properties across the city-state posted month-on-month growth in March, the property agency said.

Knight Frank noted that leasing inquiries it received from investors and owner-occupiers alike remained healthy.

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“Sentiment in the manufacturing sector has turned a corner and this will in turn contribute to the continued resilience of industrial real estate,” said Norishikin Khalik, director for occupier strategy and solutions at the firm.

The report noted how the city-state continues to be a regional hub for global companies wanting to set up shop in or expand to Asia. 

It added that the improving manufacturing activity could contribute in bringing stability to Singapore’s industrial real estate sector, as well as help keep prices, rents and occupancy levels to remain “stable” for the rest of the year.

“International firms continue to view Singapore to be a suitable place to enter and/or expand their operations due to a quality workforce and proximity to the Southeast Asian market,” it said.

Knight Frank expects rental rates and prices of industrial properties to rise by 3% to 5% this year, with warehouses likely leading the uptick.