Bookmark & Share
Singapore’s industrial sector is expected to remain subdued with no quick recovery expected
With global headwinds and uncertainties intensifying, Singapore’s industrial sector is expected to remain subdued with no quick recovery expected, particularly for its manufacturing and trade subsectors, revealed an Edmund Tie & Company report.
The property consultancy firm expects this to have broad flow-on impacts on most industrial types and to a lesser extent to data centres and business parks.
“However, the government stands ready to support the economy in the event of a downturn and has also reduced the industrial land supply on the GLS Programme,” it said.
“This, combined with a reduced supply pipeline over the next three years, will provide some support to occupancy and rental rates.”
Singapore’s industrial supply pipeline is expected to stand at around 26.7 million sq ft net lettable area (NLA) (or 7.6 million sq ft per annum) from now to 2022. The figure is around 40 to 50 percent lower compared to the last three- and five-year averages.
The report revealed that islandwide net absorption continued to weaken by 8.5 percent quarter-on-quarter to around 1.6 million sq ft in Q3 2019, while net supply increased by more than 50 percent to 1.4 million sq ft in the second quarter of 2019.
Notable tenant movements expansions seen in Q3 included Google Asia Pacific’s taking up of 344,100 sq ft in Alexandra Technopark, AIMS APAC REIT’s clinching of a US-based global medical device firm as a master tenant of its ramp-up facility at 3 Tuas Avenue and the opening of Micron Technology’s expanded fabrication plant in Woodlands.
With this, Edmund Tie & Company expects rents for multiple-user factories and warehouses to “face some downward pressure of between -3.0 and 0.0 percent, while the rental growth for business park space and hi-tech industrial space are likely to remain relatively positive, ranging between 2.0 and 5.0 percent in 2019”.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
Related Articles:
Govt reduces industrial land supply for second half of 2019
Increase in occupancy rates buoys industrial REITs Q1 results
Trade tensions to weigh on retail, industrial property markets