Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers

According to Colliers, the supply of industrial sector is anticipated to swell this year, with over 2.5 times the supply last year coming on stream before reducing from 2026 onwards. “This upsurge in supply has led to today supply-demand discrepancy with segments of the market now viewing upcoming supply with slower precommitments or completed projects with lower occupancy,” the record states.

In the meantime, provided the bump in supply and the predicted restraint in rents, this might be a good year for tenants with even more options coming to market, states Colliers. “New industrial developments, equipped with more modern specs, could motivate more firms to transfer from older, ageing production sectors to newer projects,” states Nicolas Menville, executive director and head of Singapore-based industrial customers for Colliers.

On the flip side, Colliers expects industrial need to continue to be sustained by the semiconductors, logistics and advanced production sectors. It even expects industrial leasing actions to see a progressive ramp-up over time as plans become more clear and market positions strengthen, underpinned by the recurring recovery in the chip cycle.

Lentoria Singapore

On top of that, increased trade protectionism has actually brought uncertainty into global markets, potentially impacting service confidence and investment decisions.

The consumer price index also expanded 0.5% q-o-q in 4Q2024, relieving from the 1.2% development in the past quarter. Last year, industrial property prices increased 2.1%, less than half of the 5.1% rise recorded the year before.

Industrial property prices and rental fees in Singapore are expected to tone down this year in the middle of higher supply and weaker demand, according to a February study report by Colliers. The firm is projecting both general yearly commercial rental and rate buildup to moderate to between 0% to 2% in 2025, contrasted to the 3.5% growth chalked up for both last year.

The higher supply, combined with enhanced caution among tenants because of persistently high interest rates and rising business expenses, is anticipated to proceed dampening rental growth.

The soft overview happens as JTC’s 4Q2024 information indicated a market place that is “slowing”, says Colliers. The JTC All Industrial rental index charted a 17th successive quarter of expansion in 4Q2024, rising 0.5% q-o-q and bringing complete progress for the year to 3.5%. Nonetheless, this notes a significant decline from the 8.9% rental development visited 2023.


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