Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
The soft outlook happens as JTC’s 4Q2024 data showed a market place that is “losing steam”, states Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of development in 4Q2024, increasing 0.5% q-o-q and bringing complete growth for the year to 3.5%. However, this notes a considerable decline from the 8.9% rental development logged in 2023.
The consumer price index additionally expanded 0.5% q-o-q in 4Q2024, relieving from the 1.2% development in the past quarter. Last year, industrial property prices increased 2.1%, even less than half of the 5.1% raise recorded the year before.
Industrial property costs and rents in Singapore are anticipated to moderate this year amidst higher supply and weaker demand, according to a February study record by Colliers. The company is predicting both overall annual commercial rental and cost buildup to moderate to between 0% to 2% in 2025, contrasted to the 3.5% growth chalked up for both last year.
In the meantime, given the bump in supply and the predicted moderation in leas, this could be a good year for tenants with even more options involving market, states Colliers. “New industrial advancements, equipped with more modern specifications, could urge a lot more services to relocate from older, aging manufacturing places to newer jobs,” claims Nicolas Menville, executive director and head of Singapore-based industrial clients for Colliers.
On the other side, Colliers expects commercial need to continue to be supported by the semiconductors, logistics and advanced production sectors. It even expects industrial leasing actions to see a progressive ramp-up over time as policies come to be clearer and market positions enhance, underpinned by the continuous recuperation in the chip cycle.
The higher supply, integrated with enhanced caution amongst occupiers due to constantly high rate of interest and elevating operating expenses, is anticipated to continue dampening rental improvement.
In addition, increased trade protectionism has brought uncertainty right into global markets, possibly affecting service confidence and investment decisions.
According to Colliers, the source of commercial spot is anticipated to swell this year, with over 2.5 times the supply in 2024 coming on stream prior to tapering off from 2026 onwards. “This upsurge in supply has led to today supply-demand discrepancy with sections of the marketplace currently viewing upcoming supply with slower precommitments or completed projects with reduced occupancy,” the file states.
