Singapore to see average annual industrial supply of 1.1m sqm until 2026

This is more than the average annual supply in the past three years.

There will continue to be a ramp-up of industrial supply in Singapore in the next few years. 

According to a Colliers report, from 2024 to 2026, there is an average annual supply of 1.1 mil sqm coming onstream, exceeding the average annual supply and demand of 1.0 mil sqm and 0.6 mil sqm respectively over the past three years.

Here’s more from Colliers:

Leasing demand is expected to pick up in tandem with an improving manufacturing sector and a pickup in sentiments. 

However, rental growth is expected to moderate in light of the higher cost of capital, tenant resistance to higher rents, and the higher upcoming supply. There has also been more renewals and consolidations than relocations or expansions, highlighting the financial constraints occupiers are facing.

On the investment front, there is likely to be more sale and leaseback transactions or portfolio sales to monetize assets. There are also likely to be more redevelopments and refurbishments of older assets in view of the preference for high quality modern industrial facilities. In anticipation of an economic recovery, REITs with sufficient debt headroom may also be on the lookout for suitable assets to acquire.

In light of slower global growth under elevated capital costs, Colliers is projecting the overall industrial rent growth for 2024 to moderate to between 3 to 5% and price growth to between 1 to 3%. Rental growth will likely be led by the warehouse segment at 4 to 6%.