Singapore warehouse rents record highest quarterly increase since 2013
Rents increased 2.1% in Q2.
Data from JTC reveal that Singapore’s all-industrial rental index rose 1.5% q-o-q in 2Q22, marking its second consecutive quarter of increase.
Tay Huey Ying, JLL Head of Research and Consultancy said this was led by the 2.1% q-o-q rent increase recorded for the warehouse and multiple-user factory segments, their highest since 2013.
Here’s more from JLL:
Escalating industrial rents was underpinned by robust occupier demand for multiple-user factories and warehouses. In particular, net absorption of warehouses expanded to a 15-quarter high, driving vacancy rate to the sub-10% level for the fifth straight quarter, and tightening to 9.1% in 2Q22, its lowest level since the 8.6% in 4Q15.
Meanwhile, surging interest rates and heightened macroeconomic uncertainties appeared to have slowed the pace of price growth in 2Q22. Based on JTC’s data, the all-industrial property price index rose by 1.5% q-o-q in 2Q22, moderating from the 2.1% q-o-q posted in 1Q22.
While we expect occupier demand for industrial space to hold firm in the rest of 2022, the ongoing geopolitical tensions, elevated macroeconomic uncertainties and surging interest rates could temper business confidence and moderate rent growth in the short-term. With over a million sqm of industrial net floor space estimated to be completed in 2H22 which is substantially higher than the 655,000 sqm of net space addition in 1H22, this could also ease some upward pressure on rents.
Notwithstanding, given the 2.5% rise in rents in 1H22, there is potential for full-year 2022 rent growth to hit a nine-year high of around 4-5%.
Similarly, the surging interest rates and elevated macroeconomic headwinds could slow the pace of price growth in the coming quarters and cap the full-year price growth at around 5-6% in 2022.