Stability expected for industrial property despite worrying manufacturing sector

Demand and occupancy rates continued to rise in the second quarter of 2023.

Data from JTC showed that the demand for industrial space rose by 303,000 square metres in the second quarter (Q2) of 2023 against 166,000 square metres of supply.

The occupancy rate for industrial property went up by 0.3% in Q2 2023, with the multi-user segment demand expanding the most by 132,000 sq m.

The manufacturing segment in Singapore continued to suffer from contraction for the rest of the year. Despite this, Knight Frank said Singapore’s stability for most industrial property types is seen for the rest of the year.

“Based on the JTC indices, prices and rents in the first six months of 2023 have already strengthened by 3.1% and 4.9% respectively, surpassing Knight Frank’s initial projections of 1% to 3% for the entire year,” said Knight Frank.

The property firm said industrial prices and rents should remain relatively steady for the rest of the year.

It also noted that Singapore is an attractive location for international firms to expand their manufacturing operations due to the market’s “access to talent, proximity to the rest of the Southeast Asian market, political and legal stability, free trade agreements with many countries, and a government-led emphasis on sustainability.”

Huttons said some industrialists may take the chance to expand ahead of the demand.

“There will be another 0.6 million square metre of industrial space completed in H2 2023. The bulk of the supply is the single-user factory space while multi-user supply remains low,” read the statement.

Strata sales

Huttons said sales of strata industrial units inched up in Q2 2023 possibly due to the cooling measures on the residential sector in April 2023. 

The largest quantum of $6.9m was for a freehold 5,457 sq ft strata unit at Delta House. Investors were also interested in strata food factory units as they bank on the strong growth potential of the food industry.