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The strong run of Singapore’s industrial property market seems to be coming to an end, as worries over an increasing supply glut threaten the growth of rents and capital values.
Last year, the Urban Redevelopment Authority (URA), reported a 16 to 22 percent growth in multi-user and warehouse price and rental indices respectively, while prices and rents also hit multi-year highs.
The Dragon Year, however, may soften or even flatten rental growth for warehouses, factories, business park properties and high-specifications industrial buildings due to oncoming supply pressure, according to consultants and analysts.
Meanwhile, Colliers International Singapore Research said some 9.59 million sq ft of industrial space is expected for 2012, 66 percent of which will be factory space.
With the huge supply of factory space, rents will likely depress at facilities around the island after reaching highs recently on the back of strong manufacturing growth.
As a result, overall demand for space will fall considering the dimmer outlook in the manufacturing sector, said Chia Siew Chuin, Director at Colliers.
“Given the intrinsic link between the performance of Singapore's industrial property market and that of the manufacturing sector, the weakening manufacturing sector (excluding biomedical) would likely have a bearing on Singapore's industrial property market growth,” she noted.
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