Industrial rents, prices up in Q1; likely to remain stable over 2021: JTC

SINGAPORE (THE BUSINESS TIMES) – Prices and rents of industrial space in Singapore continued to rebound quarter on quarter (qoq) in the first three months of 2021, following the upward trend in Q4 2020, but the numbers are still down year on year.

According to data released by JTC on Thursday (April 22), prices of industrial properties increased by 0.9 per cent qoq, while rentals rose 06 per cent. This came as rising demand stood in contrast to the low supply brought about by the pandemic’s interruption of construction activities.

While one million square metres (sq m) of industrial space was originally expected to be completed in Q1 2021, the three months saw only about 131,000 sq m completed.

Compared to the same period last year, prices and rents are still down 1.3 per cent and 0.9 per cent respectively.

Most segments saw a qoq drop in occupancy rates. Business parks took the lead with a 0.7 per cent fall, followed by single-use factories and warehouses, which slipped 0.1 per cent each. However, this was offset by multiple-user factories, which grew 0.5 per cent in the three months. This segment managed to pull overall occupancy rates to a positive turn, edging up 0.1 percentage point to 90 per cent from last quarter’s 89.9 per cent.

Nearly all segments reported year-on-year (yoy) growth, except business parks, which fell 0.9 per cent. Overall occupancy rates increased 0.8 percentage point compared to the previous year, continuing last quarter’s upward trend.

In Q1 2021, JTC allocated a total of 87,000 sq m of ready-built facilities (RBF) space to industrialists, which included 61,000 sq m of high-rise space and 18,700 sq m of land-based factory space.

Total RBF returns for the quarter were 53,700 sq m, of which 27,700 sq m was high-rise space and 19,300 sq m was land-based factory space. According to the industrial land and infrastructure agency, about 57 per cent of the total returns were due to natural expiries or companies consolidating their operations.

Looking ahead, JTC is projecting demand for industrial space to increase as the economy recovers further in 2021.

“Any potential rise in occupancy is likely to be tempered by new completions and the increase in supply into the market. As such, prices and rentals are likely to remain stable,” it said.

As at the end of March this year, there was a total of 50.1 million sq m of industrial space. JTC is expecting 2.4 million sq m of new industrial space to be completed by the end of the year, with another 1.6 million sq m in 2022. This comprises 1.4 million sq m of multiple-user factory space, 1.6 million sq m of single-user factory space, 800,000 sq m of warehouse space, and 200,000 sq m of space for business parks.

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