Manufacturing Rebound Boosts Industrial Sales And Rents 2Q2024 Knight Frank
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In the second quarter of 2024, the industrial property market in Singapore has shown a significant increase in sales activity, rising by 34.7% compared to the previous quarter. According to a report by Knight Frank, there were 509 transactions totaling $949.6 million in value, representing a 25.1% increase from the previous quarter.
This surge in activity is attributed to the rebound of the manufacturing sector, with the Ministry of Trade and Industry’s advance estimates showing a growth of 0.5% year-on-year and 0.6% quarter-on-quarter. This is a reversal from the previous quarter’s contraction of 1.7% year-on-year and 5.3% quarter-on-quarter.
“Manufacturing in Singapore has turned a corner, alongside the economy, as international manufacturers continue to invest in the promise of stability and access to Southeast Asian markets,” says Calvin Yeo, head of occupier strategy and solutions at Knight Frank.
In addition to sales activity, industrial leasing volume also saw a boost of 5.9% quarter-on-quarter, with 3,123 transactions in the second quarter of 2024. However, rental transaction value remained relatively flat, with a slight increase of 0.5% to $28.7 million. Yeo attributes this muted growth to occupancy pressures in some market segments. On a year-on-year basis, industrial leasing volume fell by 5.3%.
In terms of rental rates, industrial rents in Singapore saw an increase of 1.4% and 4% in the 25th and 75th percentiles, respectively, in the second quarter of 2024. However, the median rent decreased by 2.2%.
In the warehousing sector, rents in the 75th percentile reached a record high of $2.88 psf per month, driven by growing demand for prime warehouse space in the Central, East, and West regions, as well as the need for cold storage space. Business park rents also saw an increase across the board, with rental rates for the 25th, median, and 75th percentiles reaching $4.07, $4.51, and $5.48 psf per month, respectively.
Yeo points out that Singapore continues to attract international companies looking to establish a base in Southeast Asia. For instance, in May, pharmaceutical giant AstraZeneca announced a $2 billion investment in a new manufacturing facility in Singapore that is set to be operational by 2029. Additionally, the data center industry has also seen significant investments, with companies like Google and ST Engineering expanding their presence in Singapore.
The growing adoption of electric vehicles (EVs) is also expected to drive manufacturing output, as demand for vehicle parts and charging infrastructure increases. Currently, one out of three new cars registered in Singapore is an EV, and there are over 7,100 charging points across the island.
Looking ahead, Yeo believes that key manufacturing metrics point towards a more positive outlook for the second half of 2024, which will support prices, rents, and occupancies across most industrial types. He anticipates industrial rents and prices to grow between 3% and 5% for the year.
