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News Release


Progressive Recovery of Industrial Property Market

Recovery observed to be broadening

Tay Huey Ying, Head of Research and Consultancy, Singapore

郑惠匀, 研究与咨询部主管 (新加坡)


Recovery observed to be broadening

The report card released by JTC today points towards an industrial property market that is steadily improving in health. For the first time since 2Q15, the decline in prices finally halt to a brake for both single-user and multi-user factories in 2Q18 (JTC does not track warehouse price trend).  Additionally, the multi-user factory segment has joined the business park segment in posting rent upside in 2Q18. 

This is the first quarter of rent increase for the multi-user factory segment since 2Q15, and it has come on the back of a strong pick-up in leasing transactions to a record high of 2,148 contracts in 2Q18, according to JTC's data which starts from 1Q00. This has likely been underpinned by the more upbeat business sentiment alongside the positive economic and manufacturing data, which has emboldened more tenants and industrialists to review their real estate options.  

The business park segment remained the top performer as rents strengthened for the fifth straight quarter to bring the overall rental increase over five quarters to 7.5%. This came as a consequence of steady demand, the sustained growth in office rents and generally positive business climate.

As of 2Q18, only the single-user factory and warehouse segments continue to record rent contractions.


Market likely to bottom within the next 12 months

We are optimistic that the industrial property market will likely bottom within the next 12 months, barring any unforeseen external shocks.

Despite escalating Sino-American trade frictions, Singapore's economic outlook for 2018 has remained positive. Moreover, the tapering pipeline supply will allow demand to play catch up. JTC's data showed that another 1.1 million sqm gross floor area of new industrial space is expected to be ready in 2H18. Including the net addition of 0.3 million sqm net floor area in 1H18, this works out to about 1.2 to 1.3 million sqm of estimated net floor area in 2018 (assuming 80% to 90% efficiency for the 2H18 supply pipeline), significantly lower than 2017's net new supply of 1.9 million sqm. In 2019, pipeline supply will fall further to around 0.9 million sqm gross floor area or about 0.7 to 0.8 million sqm of estimated net floor area (assuming 80% to 90% efficiency).

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