Singapore industrial property market records greatest performance in 8 years 

The Q1 2022 rental and price indexes grew 1% and 2.1%, respectively.

The all-industrial rental index in Singapore grew 1% q-o-q in the first quarter of 2022, the fastest since the 4.4% recorded in 3Q13. Meanwhile, the all-industrial property price index surged 2.1% q-o-q in 1Q22, the sharpest since the 3.8% posted in 1Q14.

According to JLL, 1Q22 rent growth was led by the warehouse segment which saw its rents rising 1.5% q-o-q mainly on the back of robust demand for ramp-up facilities. In fact, the supply crunch of this asset class has contributed to the islandwide warehouse vacancy rate staying at sub-10% for four consecutive quarters, and demand spilling into cargo lift logistics/warehouse premises. 

The last time the islandwide warehouse vacancy fell below 10% was in 1Q16. Fulfilment for larger logistics/warehouse space requirements, especially for 100,000 sq ft and above, also remained challenging due to the lack of available options in 1Q22.

Here’s more from JLL:

We expect occupier demand for industrial space to stay firm for the rest of 2022, supported by growth industries such as the food, electronics, media, e-commerce, technology and life sciences. The global supply chain disruptions and geopolitical tensions could also lead to increased inventory holding and potentially stockpiling of essential items, which could underpin near-term demand for logistics/warehouse space.

Against this demand outlook and given that rents had already risen by 1.0% in 1Q22, full-year 2022 rent growth is expected to surpass the 2.0% clocked in 2021. However, the foreseen surge in new supply could cap full-year rent growth to within 5%. We estimate that more than 2 million sqm of industrial net floor space could be completed in 2022, substantially higher than the 669,000 sqm of net space addition in 2021.

There is also potential for full-year 2022 industrial price growth, which had already appreciated by 2.1% in 1Q22, to exceed 2021’s 4.4% rise, on the back of the rent growth potential and sustained buying demand for industrial assets. However, the rising interest rate outlook could keep full-year price growth in check, possibly to around 5-8% in 2022.