A recent study by Colliers predicts that the industrial property market in Singapore will experience a slow-down in 2025 due to an increase in supply and decrease in demand. According to the report, both rental and price growth are expected to moderate to between 0% to 2% this year, compared to the 3.5% growth recorded in 2024.
This subdued outlook is attributed to JTC’s 4Q2024 data, which showed signs of the market “losing steam”. The JTC All Industrial rental index recorded a 17th consecutive quarter of growth in 4Q2024, rising 0.5% quarter-on-quarter. However, this is a significant decline from the 8.9% rental growth recorded in 2023. The price index also grew 0.5% q-o-q in 4Q2024, but this is a decrease from the 1.2% growth in the previous quarter. In 2024, industrial property prices rose by 2.1%, which is less than half of the 5.1% increase seen in 2023.
Colliers highlights that the supply of industrial space is expected to increase this year, with over 2.5 times the supply of last year coming onto the market before tapering off in 2026. This oversupply has led to a market imbalance with lower precommitments and lower occupancy rates in completed projects.
The increase in supply, coupled with cautious behaviour among occupiers due to high interest rates and rising operating costs, is expected to continue to dampen rental growth. Colliers also notes that trade protectionism may bring uncertainty into the global market, affecting business confidence and investment decisions.
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However, the study also predicts that industrial demand will be supported by the semiconductor, logistics and advanced manufacturing sectors. It also expects leasing activity to gradually increase as the market improves and policies become clearer, driven by the ongoing upturn in the chip cycle.
In light of the projected moderation in rents, Colliers suggests this could be a good year for tenants as there will be more options on the market. The report states that newer industrial developments, equipped with modern specifications, could attract businesses to relocate from older, aging manufacturing spaces.
Nicolas Menville, Executive Director and Head of Singapore-based Industrial Clients for Colliers, suggests that this could be a good opportunity for businesses to find newer and more modern industrial spaces. The report also provides information on industrial real estate properties, recent transactions, and price trends. It also compares the price trend of commercial and industrial properties, giving a comprehensive overview of the current market.