Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers

The muted overview happens as JTC’s 4Q2024 information showed a market that is “slowing”, claims Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of growth in 4Q2024, rising 0.5% q-o-q and bringing complete development for the year to 3.5%. Nonetheless, this marks a substantial decrease from the 8.9% rental growth visited 2023.

According to Colliers, the source of commercial sector is expected to swell this year, with over 2.5 times the supply in 2024 coming on stream before tapering off from 2026 onwards. “This upsurge in supply has actually caused the present supply-demand imbalance with sections of the marketplace now observing upcoming supply with slower precommitments or completed projects with reduced tenancy,” the file states.

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In the meantime, provided the bump in supply and the predicted moderation in rental fees, this could be a good year for tenants with more choices involving market, states Colliers. “New commercial advancements, outfitted with more modern specs, could motivate a lot more companies to move from older, aging production spaces to newer projects,” states Nicolas Menville, executive director and head of Singapore-based commercial clients for Colliers.

The consumer price index also expanded 0.5% q-o-q in 4Q2024, relieving from the 1.2% development in the past quarter. Last year, industrial real estate costs rose 2.1%, even less than half of the 5.1% increase reported the year before.

Additionally, heightened trade protectionism has actually brought uncertainty right into global markets, potentially impacting business confidence and financial investment decisions.

On the other hand, Colliers expects industrial need to continue to be supported by the semiconductors, logistics and advanced production markets. It also expects industrial leasing activities to see a steady ramp-up over time as plans come to be clearer and market positions strengthen, underpinned by the continuous upturn in the chip cycle.

Industrial property prices and leas in Singapore are anticipated to regulate this year in the middle of greater supply and weaker need, according to a February study report by Colliers. The firm is predicting both overall yearly commercial leasing and cost growth to moderate to in between 0% to 2% in 2025, compared to the 3.5% increase chalked up for both last year.

The greater supply, incorporated with increased caution amongst tenants due to constantly high rate of interest and elevating business expenses, is expected to proceed dampening rental growth.


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