Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
Industrial property costs and leas in Singapore are anticipated to tone down this year amidst higher supply and weaker need, according to a February study report by Colliers. The firm is predicting both total annual industrial rental and cost buildup to moderate to between 0% to 2% in 2025, compared to the 3.5% growth chalked up for both in 2024.
In addition, heightened trade protectionism has brought skepticism right into global markets, possibly impacting company confidence and financial investment decisions.
In the meantime, given the bump in supply and the forecasted restraint in rents, this could be a good year for lessees with even more choices pertaining to market, claims Colliers. “New commercial advancements, equipped with even more modern requirements, can encourage much more firms to move from older, aging production offices to more recent jobs,” says Nicolas Menville, executive director and head of Singapore-based industrial clients for Colliers.
The higher supply, combined with enhanced caution among tenants due to constantly high rate of interest and escalating business expenses, is anticipated to proceed dampening rental growth.
The consumer price index additionally grew 0.5% q-o-q in 4Q2024, alleviating from the 1.2% growth in the previous quarter. Last year, industrial property costs increased 2.1%, even less than half of the 5.1% rise recorded the year before.
On the other hand, Colliers prepares for industrial need to continue to be sustained by the semiconductors, logistics and advanced production fields. It even anticipates industrial leasing actions to see a progressive ramp-up over time as policies become more clear and market views improve, underpinned by the ongoing recuperation in the chip cycle.
According to Colliers, the supply of commercial sector 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 surge in supply has actually caused the present supply-demand imbalance with sectors of the market now viewing upcoming supply with slower precommitments or completed ventures with reduced occupancy,” the record states.
The low-key outlook happens as JTC’s 4Q2024 information showed a market that is “losing steam”, says Colliers. The JTC All Industrial rental index charted a 17th constant quarter of expansion in 4Q2024, increasing 0.5% q-o-q and bringing complete growth for the year to 3.5%. However, this marks a significant decrease from the 8.9% rental development logged in 2023.