Singapore industrial sales drop 13.9% to S$922.7m in Q3

This comes from 381 transactions closed during the quarter.

Singapore industrial sales activity in Q3 2023 slowed down, registering a quarterly decline of 16.4% with 381 sales transactions that amounted to S$922.7 million, a fall of 13.9% q-o-q, according to data from Knight Frank. 

Notable sales included the sale of Sime Darby Business Centre for S$68.0 million (S$818 psf) in July, and Reebonz Building to the Tan family of Sunray Woodcraft Construction for S$39.0 million (S$453 psf) in August. 

Here’s more from Knight Frank:

In contrast to industrial sales, leasing activity was more stable, registering a moderate pick up in average rents for all property types. However, islandwide leasing activity for multiple-user factories decreased 2.4% q-o-q to 2,461 tenancies even though the median rent grew 3.7% q-o-q to S$2.17 psf pm, after chalking up a similar increase in Q2 2023. Despite the shrinking electronics sector, occupancy levels remain stable without noticeable signs of end-users giving up significant volumes of space. 

Quality warehouse spaces and facilities remained steady in 2023. Warehouse median rents increased for the sixth consecutive quarter touching S$2.00 psf pm in the current quarter, while rental transaction volume was fairly consistent with 456 units. The promise of soon-to-be completed stock, combined with inventory being cleared from existing storage spaces have eased some of the demand pressures for quality logistics facilities in Q3 2023.

Outlook

The industrial real estate sector has been in a holding pattern throughout 2023 and is likely to end the year in similar circumstances. Even though manufacturing output and contribution to GDP contracted during the year, industrial real estate indicators of occupancy levels, prices and rents generally remained stable for most industrial property types, from time to time even recording marginal gains. 

While not out of the woods yet, there are signs that the outlook by the end of 2023 will be more hopeful for manufacturing than at the start of the year, with early signals that the worst might have passed. 

Although Singapore’s key exports shrank by 13.2% y-o-y in September 2023, this has abated from the 22.5% slide in August. Added to the combination of the turnaround in sentiment from official business surveys, the PMI turning positive, and a slight quarterly gain in manufacturing GDP growth based on Q3 2023 advance estimates, the sector might start to recover in early 2024 with the industrial real estate market strengthening in tandem.