Ms. Tricia Song, Head of Research for Singapore, Colliers International:
“Industrial rents and prices remained relatively stable with both falling by just 0.1% quarter-on-quarter (QOQ). This brings the All-Industrial Rental Index to 13.5% below the peak in Q2 2014. In particular, rents for business park space have increased for the 4th consecutive quarter, by 2.4% QOQ. This is the fastest quarterly growth rate for this segment since Q3 2011, mainly due to limited new industrial park supply and increased demand for high-specs space. Rents for single-user factory continued to fall for the 3rd consecutive quarter, by 0.8% QOQ, the highest rate of decline among all types in Q1. Rents for warehouses continued to decline but at a slower rate of 0.3% in Q1, compared to -1.0% QOQ in Q4 2017.
2018 new industrial supply is set to ease from the record supply of 20.89 million sq ft (net lettable area) of industrial space that came on-stream in 2017. A total of 15.42 million sq ft (gross) of industrial space, including 2.54 million sq ft of multiple-user factory space, is set to complete for the rest of 2018, with new supply to ease further in 2019. Prices and rents may start to stabilise in tandem with occupancy rates. Already, overall occupancy improved for the second consecutive quarter, by 0.1% points QOQ to 89.0%, led mainly by single-user factory segment.
Singapore's Q1 GDP (advanced estimates) grew 4.3% YOY, faster than the 3.6% in Q4, driven by the twin engines of manufacturing and services, which grew 10.1% and 3.8% respectively. Steady economic growth should help to lift business sentiment and encourage industrialists to consider expanding their operations.
We expect rents to stabilise in 2018 and to post modest gains beyond that as new supply tapers in coming years. New high-specifications and business park industrial space will lead demand.”