2024-08-12-莱坊-Singapore_Industrial_and_Logistics_Market_Update_Q2_2024_2页_586kb

Summary of Industrial & Logistics Sector in Q2 2024

Core Content

The industrial and logistics sector in Singapore showed signs of recovery in Q2 2024, following a contraction in the previous quarter. The broader economy also experienced growth, with a year-on-year (y-o-y) increase of 2.9% and a quarter-on-quarter (q-o-q) rise of 0.4%. This positive trend was driven by international manufacturers investing in Singapore for its stability and access to Southeast Asian markets.

Key Industry Trends

Manufacturing Sector Recovery

• Overall Growth: The manufacturing sector expanded by 0.5% y-o-y and 0.6% q-o-q in Q2 2024, reversing the contraction of -1.7% y-o-y and -5.3% q-o-q in Q1 2024.
• Sector Performance:
  • Electronics: Recorded a significant 20.1% y-o-y increase.
  • Chemicals: Grew by 7.9% y-o-y.
  • Transport Engineering: Expanded by 7.8% y-o-y.
  • General Manufacturing: Declined by -4.4% y-o-y.
  • Precision Engineering: Fell by -8.3% y-o-y.
  • Biomedical Manufacturing: Experiencing the largest drop of -42.6% y-o-y.
• Business Expectations: Optimism is rising, with an overall net weighted balance of 22.0% of manufacturers expecting a favorable business situation for all clusters between April and September 2024.

Industrial Real Estate Activity

• Sales Activity: Increased by 34.7% q-o-q and 13.2% y-o-y, with total sales reaching S$949.6 million in Q2 2024.
• Notable Transactions:
  • Sale of BHL Factories at 2C Mandai Estate for S$74.0 million in May.
  • Sale of Kian Ann Building at 7 Changi South Lane for S$63.0 million in June.
  • Sale of a single-user factory at 47 Pandan Road for S$36.0 million in April.
• Leasing Activity:
  • 3,123 leases were transacted in Q2 2024, reflecting a 5.9% q-o-q increase but a 5.3% y-o-y decline.
  • Total industrial rental value rose slightly by 0.5% q-o-q to S$28.7 million.
  • Rental Trends:
    • Island-wide unit rents increased by 1.4% and 4.0% in the 25th and 75th percentiles respectively.
    • Median rents decreased by 2.2%.
    • Prime warehouse space demand remained strong, with 75th percentile rents reaching a record high of S$2.88 psf pm.
    • Business park rents increased across all percentiles to S$4.07, S$4.51, and S$5.48 psf pm.

Emerging Sectors

Electric Vehicles (EVs)

• Growth: About one in three new cars registered in Singapore are EVs.
• Charging Infrastructure: Over 7,100 charging points are available on the island.
• Impact on Manufacturing: The sustained growth of the EV population is expected to drive demand for sustainable parts and supporting infrastructure.

Data Centres

• Capacity Expansion: Singapore plans to increase data centre capacity by at least 300 MW under the Green Data Centre Roadmap launched in May 2024.
• Current Capacity: Singapore already has 1.4 GW of capacity and over 70 data centres.
• Major Investors:
  • Google: Set to invest S$6.7 billion in infrastructure, including the completion of its fourth data centre in Singapore.
  • ST Engineering: Planning to invest S$120 million in its fourth and newest seven-storey data centre at Jalan Boon Lay.

Market Outlook

• Stability in Prices and Rents: Industrial property prices and rents are expected to remain stable across most sectors in 2024.
• Growth Projections: Factory rents and prices are likely to maintain with a 3% to 5% growth for the year.
• Demand Drivers: Continued interest from international firms, a skilled workforce, and Singapore's strategic location in Southeast Asia support a positive outlook for the second half of 2024.

Contact Information

For further information, please contact:

• Calvin Yeo
  Head, Occupier Strategy and Solutions
  +65 6228 6887
  calvin.yeo@sg.knightfrank.com

• Alvin Teng
  Director (Industrial), Occupier Strategy and Solutions
  +65 6228 6893
  alvin.teng@sg.knightfrank.com

• Leonard Tay
  Head, Research
  +65 6228 6854
  leonard.tay@sg.knightfrank.com

• Sim Li Wei
  Analyst, Research
  +65 6228 6856
  liwei.sim@sg.knightfrank.com

Conclusion

The industrial and logistics sector in Singapore is showing resilience and growth, particularly in the electronics and data centre sectors. Despite challenges such as supply chain disruptions and declines in certain manufacturing clusters, the overall outlook remains optimistic. With continued investment and strategic initiatives, Singapore is well-positioned to maintain its role as a key industrial hub in Southeast Asia.