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Rents and prices of industrial space in Singapore marginally declined in the first quarter of 2020, while the occupancy rate held steady.
“The changes in the rental and price indices for Q1 2020 were muted and have not fully captured the current ground sentiments and the full impact of the coronavirus outbreak (COVID-19), as the circuit breaker measures kicked in after the quarter, on 7 April,” said Tricia Song, Head of Research for Singapore at Colliers International.
The rental index dipped 0.1% quarter-on-quarter in Q1 2020, led by multi-user factory which dropped 0.4%. Single-user factory rents fell 0.2% while warehouse rents increased 0.2%.
Overall occupancy rate remained unchanged at 89.2%, thanks to the multiple-user factory segment, which posted a 0.4 percentage point increase in occupancy rate. Other segments registered a decline in occupancy rates, with warehouse falling the most at 0.5 percentage points.
Meanwhile, the all-industrial price index fell 0.4% quarter-on-quarter in Q1 2020, with both the single-user factory and multiple-user factory prices declining 0.1% and 0.6%.
In Q1 2020, the total industrial stock completed stood at 2.1 million sq ft (net), 77% of which are in factory. Based on plans as of end-March, 19.1 million sq ft (net) of industrial space was originally expected to be completed in the next three quarters.
JTC revealed that this would likely be delayed now. Of this 19.1 million sq ft of space, 37% is in single-user factory, 40% in multiple-user factory, 8% in business park and 15% in warehouse.
Looking ahead, Song expects demand for general factory space to remain weak in the near term, as industrialists recalibrate their expansion plans and space requirements amidst a bleak manufacturing outlook.
“The demand disruption could be tempered by delays in what would have been a sizable new supply for the remaining of 2020. Hence, we expect that overall factory rent will likely remain subdued with a slight decline by the end of 2020, especially for older spaces in remote locations.”
She added that the surge in local demand for data broadband, e-commerce, delivery services and various online activities during the circuit breaker period will “provide a boost in demand for logistics spaces and data centres”.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg