Higher supply and weaker demand to put downward pressure on industrial property rents: Colliers
According to Colliers, the source of commercial space is anticipated to grow this year, with over 2.5 times the supply last year coming on stream prior to reducing from 2026 onwards. “This upsurge in supply has led to the present supply-demand imbalance with sections of the marketplace currently viewing upcoming supply with slower precommitments or completed ventures with reduced tenancy,” the record states.
The muted overview enters as JTC’s 4Q2024 data suggested a market that is “slowing”, states Colliers. The JTC All Industrial rental index charted a 17th consecutive quarter of development in 4Q2024, rising 0.5% q-o-q and bringing overall development for the year to 3.5%. However, this marks a significant decrease from the 8.9% rental development visited 2023.
On the other side, Colliers prepares for commercial need to continue to be sustained by the semiconductors, logistics and advanced production fields. It additionally expects industrial leasing ventures to see a gradual ramp-up over time as plans become more clear and market sentiments improve, underpinned by the ongoing recuperation in the chip cycle.
The price index additionally grew 0.5% q-o-q in 4Q2024, easing from the 1.2% growth in the past quarter. Last year, industrial real estate prices climbed 2.1%, less than half of the 5.1% increase recorded the year before.
The Arcady @ Boon Keng floor plan
Industrial property rates and rental fees in Singapore are assumed to regulate this year amid a lot higher supply and weak demand, according to a February study record by Colliers. The firm is projecting both total yearly industrial leasing and price buildup to moderate to between 0% to 2% in 2025, compared to the 3.5% increase chalked up for both in 2024.
The greater supply, combined with raised caution amongst occupiers as a result of persistently high rate of interest and rising operating expenses, is expected to proceed dampening rental increase.
In the meantime, provided the bump in supply and the predicted moderation in rents, this might be a good year for renters with more alternatives coming to market, says Colliers. “New commercial advancements, geared up with even more modern specs, might encourage extra services to transfer from older, aging manufacturing offices to newer projects,” states Nicolas Menville, executive director and head of Singapore-based commercial clients for Colliers.
Furthermore, increased trade protectionism has brought unpredictability right into worldwide markets, possibly impacting service confidence and investment decisions.
