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Knight Frank said the resilient performance was not only supported by the “higher space appetite from the e-commerce sector but also the production and storage of essential commodities such as medical and hygiene-related products”.
Prime warehouse rents in Singapore remained generally stable in the first half of 2020, falling only by 0.6% half-on-half to $1.80 per sq ft per month (psf pm), revealed a Knight Frank report.
This comes even as economic activity ground to a halt due to the circuit breaker measures imposed in April and June and the economy entering a recession during the same period.
Knight Frank said the resilient performance was not only supported by the “higher space appetite from the e-commerce sector but also the production and storage of essential commodities such as medical and hygiene-related products”.
With just 4% of existing stock set for completion over 2020/2021 and half pre-committed, the property consultancy expects warehouse rents to remain steady until the end of 2020.
“It has become clear that the winner coming out of this health crisis is very much some specialist sub-sectors within the industrial asset class, including institutional-grade warehouses. We expect rents to stabilise and gradually trend upwards in the coming months,” said Daniel Ding, Head of Capital Markets for Land & Building, International Real Estate & Industrial, Knight Frank Singapore.
The report noted that 1H 2020 turned out to be a resilient period for the Asia-Pacific warehouse markets, with prime warehouse rents across 17 cities tracked by Knight Frank registering an average drop of 0.02% half-on-half despite COVID-19.
“With most of the region under some form lockdown and with movement restrictions in place, a significant portion of consumption demand was diverted online as people were kept at home,” said the report.
It revealed that online consumption in the developed Asia-Pacific markets made up close to 20% of total retail consumption in 1H 2020, up from 15% over the same period last year.
Looking ahead, Knight Frank expects market conditions for 16 of the 17 cities tracked to remain stable or improve in the next 12 months. It also expects warehouse rents to grow by an average of 3% to 5% by end-2020.
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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