Industrial market sees steady growth in Singapore

Gains in rents and occupancies in line with broader economic recovery

The industrial property market in Singapore saw marginal but steady growth in terms of rents and occupancies last year.

This positive performance was in line with the broad recovery of the city state’s economy, with the Ministry of Trade and Industry expecting gross domestic product growth of about 7 per cent for 2021.

According to Tricia Song, head of research for Southeast Asia at CBRE, there had been an increase in industrial rents across all segments last year, and this growth would be propelled by several active economic sectors this year.

The multiple-user factory segment saw a 0.3 per cent quarter-on-quarter increase in its rental index in the third quarter, while the single-user segment recorded a 0.6 per cent gain. Overall, the industrial property market saw a 0.7 per cent rise in the rental index last quarter.

CBRE research showed the semiconductor segment received a boost amid a global chip shortage, coupled with a rise in demand from cloud services and a gradual roll-out of 5G services around the world.

The consultancy also noted that a thriving pharmaceutical and biomedical industry led an increase in leasing demand from manufacturers of medical gloves and masks, as global trade in sectors related to Covid-19 remained active.

E-commerce continued to grow as well, CBRE said, and this led to a high take-up rate for warehouse facilities by third-party logistics companies in Singapore.

Growing demand for online grocery shopping also highlighted the importance of cold-chain logistics, the logistics process for products needing refrigeration.

In its third-quarter industrial market report, JTC said demand for industrial space in Singapore was expected to increase this year. JTC is a board under the trade ministry that champions sustainable industrial development.

While a potential rise in the overall occupancy rate might be tempered by new factory and industrial developments this year, incoming supply might be disrupted by possible delays in expected completions, JTC said.

“As vendors are accumulating more stocks to meet their production needs and keep their finished and unfinished products in view of the disruption, this has resulted in surging demand for warehouse space,” said Lynus Pook, senior director, regional industrial advisory, Asia, at Colliers International.

According to Song, modern ramp-up warehouses featuring high specifications reached nearfull capacity last year.

“Occupiers are now turning to general warehousing space of older specifications, for example, warehouses with cargo lifts instead of modern ramp-up warehousing facilities,” she said.