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Industrial property leases in Singapore last year increased by 14.6 percent on an annual basis to 10,473 cases, the highest yearly volume since JTC started tracking this data since 2000, according to a recent report from Colliers International.
“Leasing volume continued the upward trend from the first half of 2018 and totalled 5,280 in the second half, as the market absorbed the abundant supply that entered in 2017 and 2018,” the property consultancy said.
It noted that 2018 was also the first time that full-year net new demand for industrial premises here exceeded net new supply since 2011. Consequently, the occupancy level of these properties edged up by 0.4 percentage point to 89.3 percent last year, albeit lower than the 93 percent recorded in 2011.
Moreover, the rental growth of industrial properties was led by business parks, where monthly rents rose by 2.9 percent year-on-year to $4.31 psf in the second half of 2018, as occupants still preferred newly completed and renovated buildings with better specs and good locations.
At the same time, upper level premises in high-spec industrial buildings outside business parks and science parks posted a 2.1 percent uptick in rent to $2.90 psf. On the other hand, that for warehouses and logistics properties dipped 0.8 percent to $1.25 psf.
“We expect the industrial rental recovery to be two-tiered with high-spec and business park space to fare better due to the higher demand, lower supply and also from the spillover effect from a strong office rent recovery in 2018 and further office rental upside in 2019,” forecasted Colliers, adding that the appetite for logistics space is expected to rise in 2019 due to online commerce.
But rents of conventional factories are projected to “remain under pressure” as this comprises over 80 percent of total future stock.
Meanwhile, Colliers expects Singapore to see more major data centre projects over the coming years, including those to be constructed by ST Telemedia Global, Digital Realty, OneAsia, Equinix, Google and Facebook.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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