Industrial Leasing Transactions 58 Q O Q 3Q2024 Knight Frank
SINGAPORE: Leasing activity in the industrial property market experienced a positive uptick in the third quarter of 2024, coinciding with a rebound in the manufacturing sector. According to Knight Frank Singapore’s quarterly report on industrial and logistics properties, there were 3,304 leasing transactions, representing an increase of 5.8% compared to the previous quarter. This also led to a 1.6% increase in the total value of rental transactions to $29.1 million in the same period. On a year-on-year basis, leasing activity saw a 2.3% growth from 3Q2023.The boost in leasing activity comes after a 9.9% expansion in the manufacturing sector in the third quarter of 2024, based on advance estimates by the Ministry of Trade and Industry. Output rose across all manufacturing sectors except for biomedical manufacturing, contributing to the growth.Read also: Singapore’s industrial property market shows resilience; opportunities emerge amid evolving leasing landscapeAdvertisementAdvertisementEconomic Development Board data showed that Singapore’s total manufacturing output, excluding biomedical manufacturing, surged 27.5% year-on-year in August. The growth was largely driven by the electronics cluster, which saw a 49.1% increase in output year-on-year due to a low semiconductor production base last year as well as higher demand for electronics.The report also showed that rents for industrial properties across the island saw a quarterly growth of 0.8% and 0.9% in the 25th percentile and median categories, respectively, in 3Q2024. However, rent in the 75th percentile fell by 3.6% quarter-on-quarter.Nevertheless, island-wide rents for single-use factory spaces saw growth across all percentiles. The 75th percentile saw an 11% increase quarter-on-quarter to $2.47 psf per month (psf pm), followed by the 25th percentile (up 2% q-o-q to $1.55 psf pm) and the median category (up 0.6% q-o-q to $1.80 psf pm).The report also highlighted that the long-awaited interest rate hike by the US Federal Reserve contributed to an optimistic outlook in the industrial property market, which led to a rise in industrial sales activity. The sales volume jumped by 199.6% quarter-on-quarter to $3.1 billion across 456 deals in 3Q2024, and saw a 206% rise year-on-year.According to the report, this growth was driven by major deals in August, as investors rushed to seal deals in anticipation of interest rate cuts and a return to positive carry. The biggest transaction was the $1.6 billion sale of a portfolio of seven industrial properties by Blackstone and Soilbuild Group to a joint venture between Lendlease and private equity group Warburg Pincus.Other notable deals in August include the purchase of a 51% stake in an industrial building at 20 Tuas South Avenue 14 by ESR LOGOS REIT for $444.6 million, as well as the purchase of a 49% stake in Elementum, a biomedical sciences development in Buona Vista, by Ho Bee Land to a Brunei sovereign wealth fund for $272 million.Read also: Niche expertise and industry skills drive SN Real Estate forwardAdvertisementLooking ahead, Calvin Yeo, head of occupier strategy and solutions at Knight Frank Singapore, anticipates continued growth in the industrial real estate market. He predicts that with the electronics sector leading the growth in manufacturing, market activity in the industrial sector is also expected to see an increase alongside interest rate cuts.He adds that he expects industrial transaction volume to continue gaining momentum, driven by sales of multi-user factory spaces and warehouses. With the borrowing environment expected to improve, he believes that individual buyers purchasing for business use and private equity funds acquiring assets for investment will start to make their move.Meanwhile, Yeo believes that industrial property rents and prices will remain stable for the rest of the year, with potential for further growth in 2025.
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