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

Industrial property costs and rental fees in Singapore are expected to regulate this year amidst a lot higher supply and weak demand, according to a February research record by Colliers. The company is forecasting both total yearly commercial rentals and rate growth to moderate to in between 0% to 2% in 2025, contrasted to the 3.5% increase chalked up for both last year.

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On the flip side, Colliers prepares for industrial need to continue to be sustained by the semiconductors, logistics and advanced manufacturing fields. It additionally anticipates industrial leasing actions to see a progressive ramp-up over time as plans come to be clearer and market positions strengthen, underpinned by the continuous recovery in the chip cycle.

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 prior to lessening from 2026 onwards. “This rise in supply has actually resulted in the present supply-demand inequality with sectors of the marketplace currently observing upcoming supply with slower precommitments or finished projects with reduced tenancy,” the report states.

The consumer price index also increased 0.5% q-o-q in 4Q2024, alleviating from the 1.2% development in the last quarter. Last year, industrial real estate rates rose 2.1%, even less than half of the 5.1% raise reported the year prior to.

The higher supply, incorporated with enhanced caution amongst occupants because of constantly high rate of interest and elevating business expenses, is expected to continue dampening rental growth.

The low-key expectation happens as JTC’s 4Q2024 data suggested a market place that is “slowing”, states Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of growth in 4Q2024, increasing 0.5% q-o-q and bringing total growth for the year to 3.5%. Nonetheless, this notes a substantial decline from the 8.9% rental development logged in 2023.

In the meantime, given the bump in supply and the forecasted balance in rents, this might be a good year for lessees with more alternatives involving market, says Colliers. “New commercial developments, outfitted with even more modern specifications, could urge extra firms to relocate from older, ageing production sectors to newer jobs,” claims Nicolas Menville, executive manager and head of Singapore-based commercial clients for Colliers.

On top of that, heightened trade protectionism has brought unpredictability right into international markets, potentially affecting organization confidence and financial investment choices.


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