Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers

The price index additionally increased 0.5% q-o-q in 4Q2024, relieving from the 1.2% development in the last quarter. Last year, industrial property rates increased 2.1%, much less than half of the 5.1% raise reported the year prior to.

Furthermore, heightened trade protectionism has brought skepticism right into global markets, possibly affecting organization confidence and investment choices.

Industrial property costs and rental fees in Singapore are anticipated to regulate this year in the middle of greater supply and weak demand, according to a February study report by Colliers. The company is projecting both overall annual industrial leasing and price growth to moderate to between 0% to 2% in 2025, compared to the 3.5% growth chalked up for both last year.

The higher supply, incorporated with raised caution amongst tenants because of constantly high interest rates and rising operating costs, is anticipated to continue dampening rental increase.

According to Colliers, the source of commercial space is expected to expand this year, with over 2.5 times the supply last year coming on stream prior to reducing from 2026 onwards. “This upsurge in supply has actually led to today supply-demand inequality with segments of the marketplace currently observing upcoming supply with slower precommitments or completed projects with lower tenancy,” the report states.

Lumina Grand City Development Limited

The muted expectation happens as JTC’s 4Q2024 information suggested a market place that is “slowing”, states Colliers. The JTC All Industrial rental index charted a 17th constant quarter of growth in 4Q2024, increasing 0.5% q-o-q and bringing overall development for the year to 3.5%. However, this marks a significant decrease from the 8.9% rental development visited 2023.

In the meantime, provided the bump in supply and the forecasted moderation in rents, this might be a good year for lessees with more options involving market, says Colliers. “New commercial growths, furnished with more modern specifications, might encourage more companies to transfer from older, ageing manufacturing spaces to newer projects,” states Nicolas Menville, executive director and head of Singapore-based commercial customers for Colliers.

On the other hand, Colliers expects commercial demand to continue to be supported by the semiconductors, logistics and advanced production fields. It also anticipates industrial leasing activities to see a steady ramp-up over time as plans come to be more clear and market sentiments enhance, underpinned by the continuous upturn in the chip cycle.


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