EDMUND TIE’s comments: JTC Q1 2023
  • Latest news
  • 27 April 2023

EDMUND TIE’s comments: JTC Q1 2023

SINGAPORE, 27 April 2023 – Mr Lam Chern Woon (蓝振文), Head of Research and Consulting at EDMUND TIE comments on JTC’s announcement on Q1 industrial property performance.

In Q1 2023, overall industrial prices and rents continued to climb for the 10th straight quarter by 1.5% qoq and 2.8% qoq, respectively.

Zooming into industrial rental market, the multiple-user factory segment recorded the greatest rental improvement at 3% qoq, as Industry 4.0 momentum underpins demand for high value-added manufacturing.

The overall industrial occupancy rates fell by 0.6% for the third consecutive quarter to 88.8% in Q1 2023, attributed to a double whammy of hefty supply completions and muted demand. Major completions for Q1 2023 include Tai Seng Exchange, new warehouse space by Soilbuild Business Park REIT at 2 Pioneer Sector 1, as well as the factory space by Hyundai Motor Singapore at 2 Bulim Link. Overall net absorption was recorded at a mere 5,000 sq m, a slide from 268,000 sq m in the previous quarter. While most segments saw negative demand, the multiple-user sector continued to outperform for the fifth consecutive quarter, with a net absorption of 104,000 sq m in Q1 2023, extending demand recorded in the previous quarter at 128,000 sq m. Despite a contraction in the manufacturing sector by 5.2% qoq in Q1 2023, demand for multiple-user factory spaces kept pace at large with new supply in Q1 2023, where occupancy rate dipped by just 0.2 percentage points, compared to 0.4-1.4 percentage points for the other segments.

The business park segment continued to come under pressure. Business park rents grew at the softest pace of 0.6% qoq in Q1 2023, while vacancy rates rose by 1.2 percentage point to 18.7%, the highest since Q3 2016. The relative weakness in this segment reflects the wider consolidation of corporate needs in the office sector, weighed down by persistent business uncertainties and rising manpower costs.

The supply pipeline remains front-loaded in 2023 and 2024, and supply will outpace demand in the near term. Putting the supply figures into perspective, a significant portion of the single-user pipeline is concentrated in sectors such as the semiconductor and pharmaceutical industries. Some data centre projects by hyperscalers for own use are also counted in the pipeline. Against the backdrop of elevated borrowing costs and slower economic outlook, industrialists are also likely to remain cautious about expansion plans. As such, we expect rental growth for multiple-user factory to soften to 3-5% for this year. Nonetheless, industrial rents are expected to be supported by sustained leasing demand for cold-chain logistics and life sciences. Recent investment commitments, such as that by Commonwealth Capital to build a new S$200 million cold-chain food logistics facility in Singapore, attest to Singapore’s status as an attractive regional hub for cold-chain logistics.

In addition, we remain sanguine on the warehouse segment, with rents projected to climb by 6% in 2023. The relentless growth of e-commerce and stockpiling requirements in the face of supply chain disruption would sustain demand for warehouse spaces; ramp-up and high-quality warehouses spaces will be supported by demand from food manufacturers and third-party logistics operators. The Food Manufacturing Industry Transformation Map which was refreshed at the end of last year is poised to elevate Singapore’s attractiveness as a regional food hub.


For further information, please contact:

Seah Li Ching (Ms)

Corporate Communications

DID: +65 6393 2369

Email: liching.seah@etcsea.com

to Top