Singapore logistics investments: stable

Singapore remains stable amid global industrial and logistics transactional activity despite H1 investments across APAC down 11% year-on-year.

Savills notes that US$78bn of industrial and logistics deals were completed globally in H1, representing over 9% growth from the 2015-19 average. While down by 16% compared to H1 2023, the transactional market is tracking higher than pre-Covid-19, with US$41.5bn raised globally in H1 2024 by funds specifically targeting industrial and logistics assets. This represents a 30% increase on the pre-Covid-19 average, despite the wider challenges around raising capital.

Across Asia Pacific, Q2 total investment of US$8bn was down 34% on the year. Like in the other regions, a large decline in portfolio deals underpinned weaker turnover. The half-year comparison is stronger: total investment was down just 11% on H1 2023, underpinned by a solid start to 2024. Australia and South Korea are the best performing major regional markets, while Singapore is broadly stable.

The prime logistics net initial yield for Singapore in the second quarter stands at 6.35%, Dubai stands at 7.5%. The yield is projected to grow over the next 12 months.

Alan Cheong, Executive Director, Research & Consultancy, Savills Singapore comments, “There is interest in Singapore’s industrial properties, especially logistics space. However, most real estate investors face a flurry of questions and delays in turnaround time when answering to the questions posed by the authorities and this has stymied investments in this sector from reaching highs.”