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Manufacturing rebound boosts industrial sales and rents in 2Q2024: Knight Frank

By Nur Hikmah Md Ali

/ EdgeProp Singapore |

July 23, 2024 2:01 PM SGT

Calvin Yeo, head of occupier strategy and solutions at Knight Frank, anticipates industrial rents and prices will grow between 3% and 5% for the year (Photo: Samuel Isaac Chua/EdgeProp Singapore)

SINGAPORE (EDGEPROP) - Industrial property sales activity rose 34.7% q-o-q in 2Q2024 to hit 509 transactions, according to a quarterly industrial and logistics report by Knight Frank. The deals totalled $949.6 million in value, representing a 25.1% q-o-q increase.

This comes as the manufacturing sector saw a rebound last quarter. Advance estimates by the Ministry of Trade and Industry show that manufacturing output grew 0.5% y-o-y and 0.6% q-o-q, reversing from a contraction of 1.7% y-o-y and 5.3% q-o-q in 1Q2024.

“Manufacturing in Singapore has turned a corner alongside the economy, as international manufacturers continue to make investments for the promise of stability and access to Southeast Asian markets,” says Calvin Yeo, head of occupier strategy and solutions at Knight Frank.

Industrial leasing volume also saw a q-o-q boost of 5.9% to 3,123 transactions in 2Q2024. However, rental transaction value stayed relatively flat, inching up 0.5% q-o-q to $28.7 million. Yeo attributes the muted growth to occupancy pressures in some market segments. On a y-o-y basis, industrial leasing volume fell 5.3%.

Industrial rents islandwide increased 1.4% and 4% in the 25th and 75th percentiles, respectively, in 2Q2024, though the median rent decreased 2.2%.

For warehouses, rents in the 75th percentile reached a record $2.88 psf per month (psf pm), supported by growing rents for prime warehouse space in the Central, East and West regions and bolstered by demand for cold storage space.

Islandwide, business park rents rose across the 25th, median and 75th percentiles to reach $4.07, $4.51 and $5.48 psf pm, respectively.

Yeo notes that Singapore continues to attract international firms seeking an operations base in Southeast Asia. For example, in May, pharmaceutical giant AstraZeneca announced a $2 billion investment for a new manufacturing facility in Singapore that will be operational by 2029.

The data centre industry has also seen further investments. In June, Google announced that it will increase its infrastructure investment in Singapore to $6.7 billion with the completion of its fourth data centre here, while ST Engineering broke ground on a new $120 million data centre at Jalan Boon Lay.

The growing adoption of electric vehicles (EVs) is also expected to drive manufacturing output as demand for vehicle parts and charging infrastructure grows. One in three new cars registered in Singapore today is an EV, while 7,100 charging points are available across the island.

Key manufacturing metrics point towards a more positive outlook in 2H2024, which Yeo believes will support prices, rents and occupancies across most industrial types. He anticipates industrial rents and prices will grow between 3% and 5% for the year.

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Knight Frank Singapore