Industrial Leasing Transactions 58 Q O Q 3Q2024 Knight Frank
, up for auction Industrial property in Ubi up for a bid of $5.4 mil Industrial property in Kaki Bukit up for auction at $9.8 mil
In the third quarter of 2024, the industrial leasing activity in Singapore saw a growth, fueled by the rebound of the manufacturing sector. Knight Frank Singapore’s latest quarterly industrial and logistics report recorded a 5.8% q-o-q increase in industrial property leasing transactions, reaching 3,304 leases. This also resulted in a 1.6% q-o-q increase in the total value of rental transactions, reaching $29.1 million.
On a year-on-year basis, leasing transactions also saw a growth of 2.3% compared to the third quarter of 2023. This increase in leasing activity was supported by a 9.9% q-o-q expansion in the manufacturing sector of Singapore, according to the Ministry of Trade and Industry’s advance estimates. All manufacturing sectors, except for biomedical manufacturing, reported a growth in output.
Data from the Economic Development Board showed that Singapore’s total manufacturing output, excluding biomedical manufacturing, saw a surge of 27.5% y-o-y in August. This growth was driven by the electronics cluster, which saw a spike of 49.1% y-o-y, benefiting from a low semiconductor production base last year as well as higher demand for electronics.
In terms of rents, industrial properties across the island saw a quarterly growth of 0.8% and 0.9% in the 25th percentile and median categories respectively in 3Q2024. However, rent in the 75th percentile fell 3.6% q-o-q. On the other hand, rents for single-use factory spaces saw a growth across all percentiles. The 75th percentile saw the highest increase of 11% q-o-q, reaching $2.47 per square foot per month (psf pm), followed by the 25th percentile (2% q-o-q increase to $1.55 psf pm) and the median category (0.6% increase to $1.80 psf pm).
Apart from the manufacturing rebound, the optimistic outlook for industrial sales activity was also attributed to the long-awaited interest rate hike by the US Federal Reserve, as highlighted in Knight Frank’s report. In the third quarter of 2024, industrial property sales increased by 199.6% q-o-q, reaching $3.1 billion across 456 deals. On a year-on-year basis, the sales value saw a surge of 206%.
The increase in sales volume was largely driven by major deals in August, with investors pulling the trigger in anticipation of interest rate cuts and a return of positive carry. The largest deal of the month was the $1.6 billion sale of a portfolio comprising seven industrial properties owned by Blackstone and Soilbuild Group to a joint venture between Lendlease and private equity group Warburg Pincus. Other notable transactions in August include the purchase of a 51% stake in an industrial building at 20 Tuas South Avenue 14 by ESR LOGOS REIT for $444.6 million, as well as the sale of a 49% stake in Elementum, a biomedical sciences development in Buona Vista, by Ho Bee Land to a Brunei sovereign wealth fund, valuing the stake at $272 million.
Looking ahead, Knight Frank Singapore’s head of occupier strategy and solutions, Calvin Yeo, expects the industrial real estate market to continue gaining momentum. He predicts that with the electronics sector leading the manufacturing growth, market activity in the industrial sector will increase alongside the interest rate cuts. This also translates to a potential increase in transaction volume, driven by sales of multiple-user factory spaces and warehouses.
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Yeo also anticipates that industrial property rents and prices will remain stable for the rest of the year, with potential for further growth in 2025. He believes that with the borrowing environment becoming more favorable, individual buyers purchasing for business use and private equity funds acquiring assets for investment will start to make their move.
