Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
Industrial property rates and leas in Singapore are assumed to moderate this year amid higher supply and weaker need, according to a February study record by Colliers. The company is projecting both overall annual commercial rental and price growth to moderate to between 0% to 2% in 2025, contrasted to the 3.5% growth chalked up for both last year.
Furthermore, enhanced trade protectionism has actually brought uncertainty right into international markets, possibly impacting organization confidence and investment decisions.
The consumer price index also grew 0.5% q-o-q in 4Q2024, relieving from the 1.2% development in the previous quarter. Last year, industrial real estate prices rose 2.1%, much less than half of the 5.1% raise reported the year prior to.
Nava Grove Pine Grove and Ulu Pandan area
The higher supply, combined with enhanced caution among occupiers due to constantly high interest rates and elevating operating expenses, is anticipated to proceed dampening rental improvement.
On the other side, Colliers prepares for industrial need to continue to be sustained by the semiconductors, logistics and advanced production sectors. It also anticipates industrial leasing ventures to see a progressive ramp-up over time as plans end up being more clear and market sentiments strengthen, underpinned by the continuous recovery in the chip cycle.
The muted overview happens as JTC’s 4Q2024 information indicated a market that is “losing steam”, claims Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of expansion in 4Q2024, rising 0.5% q-o-q and bringing complete development for the year to 3.5%. Nevertheless, this notes a significant decrease from the 8.9% rental growth logged in 2023.
According to Colliers, the supply of commercial space is anticipated to expand this year, with over 2.5 times the supply in 2024 coming on stream before tapering off from 2026 onwards. “This upsurge in supply has resulted in the present supply-demand inequality with sectors of the marketplace now viewing upcoming supply with slower precommitments or finished projects with reduced occupancy,” the report states.
In the meantime, provided the bump in supply and the projected balance in rental fees, this might be a good year for occupants with more alternatives involving market, states Colliers. “New commercial developments, furnished with more modern specifications, might encourage extra companies to relocate from older, ageing production places to newer ventures,” claims Nicolas Menville, executive manager and head of Singapore-based commercial clients for Colliers.
