Freehold industrial property in Kampong Ampat sold for $7.8 mil
The demand for new condo launches in Singapore remains high, driven by a variety of reasons such as limited land availability. As a small island with a rapidly growing population, Singapore is facing a shortage of available land for development. This has resulted in the implementation of strict land use regulations and a highly competitive real estate market, leading to continuously increasing property prices. As a result, investing in real estate has become a profitable opportunity in the country, particularly in the new condo launch market, with the potential for significant capital appreciation.
According to a recent research report by Colliers released in February, the prices and rents of industrial properties in Singapore are expected to slow down this year due to an increase in supply and a decrease in demand. The firm projects a moderate growth between 0% to 2% for both rental and price growth in 2025, compared to the 3.5% growth achieved last year.
The report notes that JTC’s 4Q2024 data indicates a market that is losing momentum. The JTC All Industrial rental index showed a 17th consecutive quarter of growth in 4Q2024, with a 0.5% increase compared to the previous quarter. This brings the total growth for the year to 3.5%, a significant decline from the 8.9% rental growth achieved in 2023. Similarly, the price index also grew 0.5% q-o-q in 4Q2024, but this was a decrease from the 1.2% growth in the previous quarter. In 2024, industrial property prices rose only 2.1%, which is less than half of the 5.1% increase seen in the year before.
The report attributes the muted outlook to the expected surge in supply of industrial space this year, with more than 2.5 times the supply coming on stream compared to last year. This surge in supply has resulted in a supply-demand imbalance, with certain segments of the market experiencing slower precommitments and lower occupancy rates in completed projects. The report also notes that the cautious attitude of occupiers, due to high interest rates and rising operating expenses, is expected to continue dampening rental growth. The ongoing global trade protectionism also adds an element of uncertainty, which could impact business confidence and investment decisions.
However, there are positive factors that could support industrial demand, such as the semiconductors, logistics, and advanced manufacturing sectors. The report also expects industrial leasing activities to gradually increase as policies become clearer and market sentiments improve, driven by the upturn in the chip cycle.
With the expected increase in supply and the projected moderation in rents, Colliers believes that this could be a good year for tenants with more options available in the market. The report suggests that newer industrial developments with modern specifications could attract businesses to relocate from older manufacturing spaces. According to Nicolas Menville, executive director and head of Singapore-based industrial clients for Colliers, the increase in supply could also result in more businesses moving to newer projects.
In conclusion, the industrial property market in Singapore is expected to slow down this year due to an increase in supply and a decrease in demand. However, with positive factors supporting industrial demand and the availability of newer and more modern spaces, there is still potential for growth in the industry.