_Q3 2022 JTC Industrial Statistics

Supported by this ongoing demand for space, industrial prices and rentals are enroute to grow by 3% to 5% for the whole of 2022, and would likely remain stable in moderate positive territory into 2023.

Leonard Tay October 27, 2022

Although the global geopolitical and economic climate has started to turn tentative, tempering business sentiments and outlook in the manufacturing sector, the industrial price and rental indices continued to improve in a consistent manner - a pattern that has characterised the industrial market for the past two years.
In the third quarter, the industrial price and rental indices continued to grow, following steady increments registered since Q3 2020. The all-industrial price index increased by 2.0% q-o-q or 7.2% y-o-y in Q3 2022 to 96.3, with a similar trend in the rental index as this inched upward by 2.1% q-o-q or 4.9% y-o-y to 95.7. Against this backdrop, the net new demand of industrial space shrunk by some 64,583 sf in Q3. At the same time, about 1.8 million sf of new industrial space came on stream, and as net new supply outstripped net take-up, the occupancy rate narrowed by 0.3 percentage points q-o-q to 89.7%.
Earlier in August 2022, Singapore’s Gross Domestic Product (GDP) growth range was narrowed from “3% to 5%” to “3% to 4%” in 2022 by the Ministry of Trade and Industry (MTI). The rate of manufacturing growth of 1.5% y-o-y in Q3 was the slowest since the y-o-y increases of above 7% each quarter throughout 2021 and the 5.5% and 5.7% y-o-y expansions recorded in Q1 and Q2 2022 respectively, as the electronics and chemicals clusters declined.
In addition, in the month of September, the overall Singapore Purchasing Managers’ Index (PMI) posted a contraction of 49.9, after 26 consecutive months of expansion, with a corresponding contraction of 49.4 in the Electronics Sector.
Despite this more cautious business environment, manufacturing clusters such as transport engineering, general manufacturing, and precision engineering continued to be the contributors to growth and output increases in Q3. Given Singapore’s appeal as a strategic and trusted node for business, the steady stream of fixed asset investment (FAI) commitments flowing into the city state will continue to generate value and create more jobs.
In Q2 2022, about S$6.3 billion of FAI commitments in Singapore were secured, signifying the highest volume on a quarterly basis since Q1 2020 which recorded some S$10.3 billion. Out of the total secured in Q2, manufacturing comprised S$3.6 billion – of which about 80.6%, or S$2.9 billion, were investments in the electronics sector. Coupled with the nation’s standing as a safe haven for businesses, foreign manufacturers continue to be compelled to set up their regional headquarters or certain business functions in Singapore to shelter against unforeseen external shocks and the looming economic uncertainty
As such, supported by this ongoing demand for space, industrial prices and rentals are enroute to grow by 3% to 5% for the whole of 2022, and would likely remain stable in moderate positive territory into 2023.