Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
The price index additionally increased 0.5% q-o-q in 4Q2024, alleviating from the 1.2% development in the last quarter. Last year, industrial real estate costs rose 2.1%, even less than half of the 5.1% raise reported the year before.
On top of that, heightened trade protectionism has brought unpredictability into international markets, potentially affecting service confidence and investment choices.
Industrial property costs and leas in Singapore are assumed to moderate this year in the middle of a lot higher supply and weak need, according to a February study record by Colliers. The company is projecting both overall annual industrial leasing and cost growth to moderate to in between 0% to 2% in 2025, compared to the 3.5% increase chalked up for both last year.
The higher supply, integrated with raised caution among occupiers because of persistently high interest rates and elevating operating costs, is expected to proceed dampening rental growth.
The muted expectation comes as JTC’s 4Q2024 data indicated a market place that is “losing steam”, says Colliers. The JTC All Industrial rental index charted a 17th constant quarter of growth in 4Q2024, increasing 0.5% q-o-q and bringing overall growth for the year to 3.5%. However, this marks a significant decrease from the 8.9% rental development visited 2023.
On the other hand, Colliers anticipates industrial demand to continue to be supported by the semiconductors, logistics and advanced production fields. It also expects industrial leasing actions to see a steady ramp-up in time as policies come to be more clear and market positions strengthen, underpinned by the continuous recuperation in the chip cycle.
In the meantime, provided the bump in supply and the projected restraint in rental fees, this could be a good year for lessees with more choices involving market, states Colliers. “New industrial advancements, geared up with even more modern specs, can motivate extra firms to move from older, aging production spaces to newer projects,” states Nicolas Menville, executive manager and head of Singapore-based industrial customers for Colliers.
According to Colliers, the supply of commercial space is anticipated to swell this year, with over 2.5 times the supply last year coming on stream prior to reducing from 2026 onwards. “This rise in supply has caused today supply-demand inequality with sections of the market currently observing upcoming supply with slower precommitments or finished projects with reduced tenancy,” the report states.
