SINGAPORE (EDGEPROP) - Singapore’s industrial sector is set to continue its growth this year, with investment activity likely to be driven by end-users looking for manufacturing facilities and Grade A warehouses with high quality specifications that meet growing supply chain demand, highlights Knight Frank in its outlook for the sector.
“The healthy demand and expanding activity in the sector will support rent and price increases of between 3% and 5% for the whole of 2022,” it adds.
In 2021, the manufacturing sector registered a growth of 12.8% y-o-y, led by output expansions in all clusters, and in particular, electronics and precision engineering.
In December, the Singapore Purchasing Managers’ Index registered a slight increase of 0.1 point from November to record an expansion of 50.7, marking the 18th straight month of expansion, notes Knight Frank. The increase was at a moderate pace, as manufacturers remained wary of production and logistics disruptions due to the Omicron variant.
In 4Q2021, the island-wide median rent of multiple-user factory space increased by 1.6% q-o-q to $1.79 psf pm, recording a continued q-o-q rise in rental growth from Q3.
Rental activity declined slightly in October and November, which registered a total of 1,628 tenancies, 10% lower than the 1,809 rental transactions recorded in July and August 2021. This was however 4.2% higher than the 1,562 tenancies signed over the same period last year.
Knight Frank also observes that there has been an increasing proportion of transactions valued at less than $10 million, which it attributes to the expansion of SMEs in the city-state.
In 4Q2021, about 99.4% of 312 multiple-user factory caveats transactions lodged as at 31 December fetched an average price of S$459 psf as at 31 December 2021, which are categorised as smaller-sized deals, it says.
Major moves in the industry include the launch of a new bioanalytical lab facility by American life sciences company Labcorp as an expansion of its central laboratory services in Jurong East.
German multinational Siltronic broke ground on a new $3 billion wafer manufacturing facility at JTC’s Tampines Wafer Fab Park.
This year, Knight Frank estimates that some 21.1 million sq ft GFA of new space is projected to come on stream, comprising 42.6% of the total stock set to be completed from 4Q2021 to 2025.