Singapore's industrial property market could stand to benefit amidst global volatility

The JTC All Industrial rental index saw its 15th consecutive quarter of growth.

Although there may be some volatility stemming from heightened protectionism affecting global trade as well as uncertainty from the timing and extent of upcoming US interest rate cuts, Singapore may stand to benefit as firms look for a stable and geopolitically neutral location to diversify their risks or set up operations, Colliers said.

The JTC All Industrial rental index continued its fifteenth consecutive quarter of growth in Q2 2024, surpassing its fourteen-quarter run from Q4 2009 to Q1 2013. The rental index rose by 1% QoQ, slowing down from the 1.7% QoQ registered in the previous quarter. 

The price index grew by 1.2% q-o-q, reversing the 0.2% decline in the previous quarter to attain its highest level since 4Q 2015.  

Both rental and price growth are expected to moderate in light of slowing global growth and higher supply.

Multiple and single-user factories drove overall industrial rental growth at 1.5% QoQ and 1.3% QoQ respectively although there has been a slight decline in the business park segment. 

From 2024 to 2026, there is an average annual supply of 1.1 mil sqm industrial space, exceeding the average annual supply and demand of 0.9 mil sqm and 0.6 mil sqm respectively over the past three years.  

This catchup in supply has led to the present supply-demand imbalance with segments of the market now seeing stock with low precommitments or completed projects with low occupancy.

“There have also been more renewals and consolidations than relocations or expansions, signaling the financial constraints occupiers are facing. Colliers is projecting the overall annual industrial rent growth for 2024 to moderate to between 3 to 5% (from 8.9% recorded in 2023) and price growth to between 1 to 3% (from 5.1% in 2023)”  Catherine He, Head of Research said. 

In contrast, the manufacturing sector rebounded in Q2 2024, and a gradual recovery is on the way. As manufacturing expands operations here, this could spur the growth of both local and foreign suppliers, thereby uplifting the entire industrial sector.