Singapore industrial sales hit record lows since Q2 2020

Total sales were only at S$715.1 million in the last quarter of 2022.

According to a Knight Frank report, Singapore industrial sales in the final quarter of 2022 came up to S$715.1 million, the lowest since Q2 2020 when sales grossed some S$324.8 million due to the onset of the pandemic. 

“Apart from the major sales of a two-storey ramp-up warehouse, Enterprise Logistics Centre, in Tuas for S$120.6 million in November, and 10 and 12 Mandai Estate for S$100 million in December, about 97.2% of the caveats lodged in Q4 2022 were deals below S$10 million,” the report said.

Here’s more from Knight Frank:

Industrial space owners are increasingly adopting a cautious stance, with expansion plans placed on hold until there is more clarity in the unfolding global economic situation. With the flow of material for production inconsistent, businesses related to electronics do not expect improvement until after mid-2023.

While sales activity slowed, leasing transactions remained relatively stable in the months of October and November 2022 with businesses in general manufacturing, construction-related manufacturing, transport engineering and precision engineering continuing to expand cautiously. The median rent for multiple-user factories increased by 8.7% y-o-y to S$1.94 psf pm with 1,571 tenancies. 

Singapore draws high-value-added manufacturing despite headwinds

Since the outbreak of the pandemic, Singapore regularly attracted fixed asset investment (FAI) into the manufacturing sector as global manufacturers looked for locations with political stability, an educated workforce and modern infrastructure. And although manufacturing FAI dropped significantly to S$411 million in Q3 2022 from the S$3.6 billion in Q2 2022, pharmaceutical facilities, semi-conductor production plants and data centres are being constructed in the industrial supply pipeline. 

During the quarter, semi-conductor companies Applied Materials announced a S$600 million 700,000 sf plant in Tampines Industrial Crescent to be ready in 2024 that would double its manufacturing presence in Singapore, while Soitec broke ground on a S$571 million extension to its Wafer Fab Park in Pasir Ris. Singapore will also have five new vaccine producing facilities, set up by pharmaceutical firms Thermo Fisher Scientific, Sanofi, BioNTech, Hilleman Laboratories and MSD. 

Additionally, data centre operators Digital Realty and Equinix were reported to be looking to expand in Singapore by applying to develop new data centres, after a moratorium issued in 2019 to pause the release of land for data centre use was lifted. 

Market outlook 

The manufacturing and industrial real-estate outlook turned cautious in the latter half of 2022 due to rising interest rates, continued global supply disruptions and the challenging times faced for the technology sector. 

Even though the electronics sector is going through a rough patch, investments continue to flow into Singapore with the belief that growth will return and be sustainable in the long-run. These in turn create demand for local Singapore enterprises. 

As such, industrial prices and rents will remain stable with a marginal growth of 1% to 3% for the whole of 2023. In the logistics segment, where supply is tight, rents for quality warehouse space might increase by a higher 3% to 5% in the year ahead.