Industrial property prices and rents in Singapore are expected to moderate this year amid higher supply and weaker demand, according to a February research report by Colliers. The firm is projecting both overall annual industrial rental and price growth to moderate to between 0% to 2% in 2025, compared to the 3.5% growth chalked up for both last year.

The muted outlook comes as JTC’s 4Q2024 data indicated a market that is “losing steam”, says Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of growth in 4Q2024, rising 0.5% q-o-q and bringing total growth for the year to 3.5%. However, this marks a significant decline from the 8.9% rental growth logged in 2023.

The price index also grew 0.5% q-o-q in 4Q2024, easing from the 1.2% growth in the previous quarter. Last year, industrial property prices rose 2.1%,  less than half of the 5.1% increase recorded the year before.

Read also: Industrial property market ends 2024 with modest gains in rents and prices

According to Colliers, the supply of industrial space is expected to swell this year, with over 2.5 times the supply last year coming on stream before tapering off from 2026 onwards. “This surge in supply has led to the present supply-demand imbalance with segments of the market now seeing upcoming supply with slower precommitments or completed projects with lower occupancy,” the report states.

The higher supply, combined with increased caution among occupiers due to persistently high interest rates and escalating operating expenses, is expected to continue dampening rental growth.

In addition, heightened trade protectionism has brought uncertainty into global markets, potentially impacting business confidence and investment decisions.

On the flip side, Colliers anticipates industrial demand to continue to be supported by the semiconductors, logistics and advanced manufacturing sectors. It also expects industrial leasing activities to see a gradual ramp-up over time as policies become clearer and market sentiments improve, underpinned by the ongoing upturn in the chip cycle.

In the meantime, given the bump in supply and the projected moderation in rents, this could be a good year for tenants with more options coming to market, says Colliers. “New industrial developments, equipped with more modern specifications, could encourage more businesses to relocate from older, ageing manufacturing spaces to newer projects,” says Nicolas Menville, executive director and head of Singapore-based industrial clients for Colliers.

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