What to expect from Singapore’s industrial property market for the rest of the year

Warehouse rents could increase by 5% this year.

Notwithstanding the global headwinds, industrial and logistics emerged as one of the most resilient segments across the various real estate industries in Singapore, according to Savills. 

In particular, demand for modern warehouse facilities and high-specification industrial facilities is likely to sustain. Some of the upcoming modern warehouse developments saw healthy pre-commitment levels. 

Savills reveals that 2 Pioneer Sector 1 (2PS1) is already more than 70% pre-committed from tenants in the FastMoving Consumer Goods (FMCG), e-commerce and third-party logistics (3PL) industries. As the supply of modern warehouse facilities with quality specifications is expected to remain limited in the near term due to construction delays, demand for such high-specification facilities is expected to hold up overall rental growth. 

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Nonetheless, industrialists may generally be more cautious with their expansion plans alongside the global semiconductor supply crunch and heightened uncertainty. Considering rising labour costs and elevated commodity prices, higher business costs could curtail manufacturing activity and any expansion of footprint. 

While multiple-user factory rents are expected to see some recovery this year, warehouse and logistics real estate is expected to better weather the increased downside risks and negative feedback effects arising from the Russia-Ukraine crisis. As such, rents for prime warehouse properties are forecast to grow by up to 5% this year, with the demand for modern warehouse facilities coming from new economy industries likely to stay firm. 

Taking the above mentioned factors into account, rent for prime multiple-user factory and warehouse & logistics properties is forecast to grow by up to 2% and 5% respectively in 2022.