Manufacturing Rebound Boosts Industrial Sales And Rents 2Q2024 Knight Frank
According to the latest quarterly industrial and logistics report by Knight Frank, industrial property sales activity in Singapore increased by 34.7% in the second quarter of 2024, with 509 transactions valued at $949.6 million. This represents a significant 25.1% increase from the previous quarter.
The growth in industrial property sales can be attributed to the rebound in the manufacturing sector, which showed a 0.5% year-on-year and 0.6% quarter-on-quarter growth in output, reversing the previous quarter’s contraction of 1.7% and 5.3% respectively.
Calvin Yeo, head of occupier strategy and solutions at Knight Frank, attributes this growth to the stability and strategic access to Southeast Asian markets that Singapore offers, making it an attractive location for international manufacturers to invest in.
In addition to the increase in property sales, industrial leasing volume also saw a 5.9% quarter-on-quarter boost, with 3,123 transactions. However, rental transaction value only saw a modest 0.5% increase, totaling $28.7 million. This can be attributed to occupancy pressures in certain market segments.
On a year-on-year basis, industrial leasing volume decreased by 5.3%. Industrial rents, however, saw growth in the 25th and 75th percentiles, with increases of 1.4% and 4% respectively in the second quarter of 2024. The median rent, however, saw a decrease of 2.2%.
The 75th percentile for warehouse rents reached a record high of $2.88 per square foot per month, driven by the demand for prime warehouse space in the Central, East, and West regions, as well as the growing need for cold storage space.
Business park rents also saw an increase across the 25th, median, and 75th percentiles, reaching $4.07, $4.51, and $5.48 per square foot per month respectively.
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Yeo notes that Singapore continues to attract international firms seeking a base for their operations in Southeast Asia. He cites the recent investment of $2 billion by pharmaceutical giant AstraZeneca for a new manufacturing facility in Singapore as an example.
The data center industry has also seen significant investments, with Google announcing a $6.7 billion increase in infrastructure investment in Singapore and ST Engineering breaking ground on a new $120 million data center.
The growing adoption of electric vehicles is also expected to drive manufacturing output, as demand for vehicle parts and charging infrastructure increases. Yeo points out that one in three new cars registered in Singapore is now an electric vehicle, with 7,100 charging points available across the island.
Overall, key manufacturing metrics indicate a positive outlook for the second half of 2024, which Yeo believes will support prices, rents, and occupancies in most industrial types. He predicts that industrial rents and prices will grow between 3% and 5% for the year.