_Industrial and Logistics Market Update Q3 2023
Industrial market riding out manufacturing woes
October 23, 2023
Highlights
- Based on advanced estimates released by the Ministry of Trade and Industry (MTI) in October 2023, the Singapore economy expanded by 0.7% y-o-y and 1.0% q-o-q, despite the narrowing of GDP growth forecast from “0.5% to 2.5%” to “0.5% to 1.5%”. Although the manufacturing sector continued to contract by 5.0% y-o-y in Q3 2023, on a quarterly basis there was a turnaround with a very slight 0.2% growth from the 1.5% q-o-q decline in Q2 2023.
- Industrial sales activity in Q3 2023 slowed down, registering a quarterly decline of 16.4% with 381 sales transactions that amounted to S$922.7 million, a fall of 13.9% q-o-q. Notable sales included the sale of Sime Darby Business Centre for S$68.0 million (S$818 psf) in July, and Reebonz Building to the Tan family of Sunray Woodcraft Construction for S$39.0 million (S$453 psf) in August.
- According to EDB, Singapore received a total of S$1.6 billion in fixed asset investment (FAI) commitments in Q2 2023, a decrease of 20.4% q-o-q and 75.2% y-o-y as global manufacturers remained tentative on expansion amid the continuing uncertainty. Nonetheless, several clusters such as the chemical, biomedical manufacturing and transport engineering clusters received more forward-looking investment commitments compared to the previous quarter, as Singapore remained attractive to high-end international industrialists.
- Although Singapore’s key exports shrank by 13.2% y-o-y in September 2023, this has abated from the 22.5% slide in August. Added to the combination of the turnaround in sentiment from official business surveys, the PMI turning positive, and a slight quarterly gain in manufacturing GDP growth based on Q3 2023 advance estimates, the sector might start to recover in early 2024 with the industrial real estate market strengthening in tandem.
Read the full report here.