,Singapore

Singapore factory prices and rents to grow by up to 5% in 2022

This is despite an upcoming substantial increase in industrial space.

According to Knight Frank, Singapore’s industrial price and rent indices continued on the slow and steady path to improvement in Q3 2021.  The all-industrial price index increased by a very slight 0.1% quarter-on-quarter (q-o-q) and the rental index increased by 0.7% q-o-q, making it four consecutive quarters of marginal, albeit positive growth. 

“In the first nine months of 2021, the all-industrial price index has increased by 2.9% and the rental index by 1.8%. The manufacturing sector remained on a growth path supported by output in all clusters, with the exception of the chemicals cluster. This contributed to the 2.4 million sf of net new demand in industrial space, roughly matching net new supply for the quarter, keeping the overall industrial occupancy rate unchanged from the previous quarter at 90.1%,” the analyst says.

Here’s more from Knight Frank: 

In the last quarter of 2021, some 9.4 million sf of industrial space is expected to be completed, with single-user factory space making up 45% and multiple-user factory space comprising 39%.

While the impending supply will keep factory price and rental growth in check for the rest of 2021, there are reasons for optimism. Singapore continues to draw manufacturing investment as a major location for chip manufacturers as German multinational Siltronic recently broke ground on a new $3 billion wafer manufacturing facility at JTC’s Tampines Wafer Fab Park. Aside from the semiconductor segment, investments were also made in the domestic food and agri-tech industries, as the government aims to produce 30% of Singapore’s nutritional needs domestically. In September, top Japanese egg producer ISE Food Holdings signed a memorandum of understanding with the Singapore Food Agency to invest S$100 million to build Singapore’s fourth egg farm, with facilities progressively opening from 2024 onwards. Esco Aster, a Singaporean contract development and manufacturing organisation, gained approval and started production of cell-cultured chicken at their Ayer Rajah Crescent facility in July. And Chinese biotech firm Avant announced the development of a pilot production facility for cultivated fish cells in September.

After having chalked up double digit year-on-year percentage growth rates for four consecutive quarters from Q3 2020 (exiting the circuit breaker) to Q2 2021 before moderating to 7.5% in Q3 2021 (advance estimates from MTI), activity in the manufacturing sector might start to ease off in the next 12 months ahead due to the economic slowdown in China and from global supply chain disruptions. Nonetheless, sustained demand for pandemic-era goods, such as bio-technology components, healthcare and sanitary goods, as well as electronics components for the pandemic-induced digital transformation, will continue to draw high-value-added manufacturing investment to Singapore. 

By the end of the year based on the current trajectory, industrial prices and rents should increase by 2% to 4% for the whole of 2021. And even though the amount of upcoming industrial space remains substantial at 49.6 million sf gross floor area (GFA) by end 2025, with 21.1 million sf GFA expected to complete in 2022, factory prices and rents could potentially increase by 3% to 5% in 2022 as Singapore stabilises from the fallout of the pandemic.

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