Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
According to Colliers, the supply of commercial sector is expected to grow this year, with over 2.5 times the supply in 2024 coming on stream before reducing from 2026 onwards. “This rise in supply has caused today supply-demand imbalance with sections of the market currently viewing upcoming supply with slower precommitments or completed projects with lower occupancy,” the file states.
Additionally, increased trade protectionism has brought skepticism into worldwide markets, possibly influencing business confidence and investment decisions.
On the other side, Colliers prepares for industrial need to continue to be supported by the semiconductors, logistics and advanced manufacturing fields. It additionally expects industrial leasing actions to see a gradual ramp-up in time as plans come to be clearer and market views improve, underpinned by the recurring upturn in the chip cycle.
Industrial property rates and rents in Singapore are assumed to tone down this year in the middle of higher supply and weaker demand, according to a February research record by Colliers. The firm is predicting both overall annual commercial rentals and rate buildup to moderate to in between 0% to 2% in 2025, contrasted to the 3.5% increase chalked up for both in 2024.
In the meantime, provided the bump in supply and the forecasted balance in leas, this might be a good year for lessees with even more alternatives pertaining to market, claims Colliers. “New commercial advancements, geared up with more modern requirements, could encourage a lot more companies to relocate from older, aging manufacturing sectors to more recent projects,” states Nicolas Menville, executive director and head of Singapore-based commercial clients for Colliers.
The higher supply, combined with enhanced caution among tenants because of constantly high interest rates and elevating business expenses, is anticipated to proceed dampening rental increase.
The price index likewise grew 0.5% q-o-q in 4Q2024, alleviating from the 1.2% growth in the last quarter. Last year, industrial real estate prices rose 2.1%, even less than half of the 5.1% increase recorded the year prior to.
The low-key overview enters as JTC’s 4Q2024 data suggested a market place that is “slowing”, claims Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of expansion in 4Q2024, increasing 0.5% q-o-q and bringing overall progress for the year to 3.5%. Nevertheless, this notes a significant decrease from the 8.9% rental development logged in 2023.
