_Industrial and Logistics Market Updates Q4 2023
Manufacturing sector starts to turnaround
January 24, 2024
- Advance estimates showed that the Singapore economy expanded by 1.2% for the whole of 2023, recording growth of 2.8% y-o-y and 1.7% q-o-q in the final quarter of the year. Despite the manufacturing contraction of 4.7% and 3.6% in the previous quarter and the whole of 2023 respectively, the sector ended the year on a positive note with a gain of 3.2% in Q4 2023.
- Islandwide unit rents for warehouse facilities showed stable growth in 2023, particularly the 75th percentile rent of S$2.70 psf per month as at Q4 2023, the highest since Q1 2000 as demand for quality logistics space remained strong. Rental transaction volume increased by 0.8% to 1,953 units in 2023. On a quarterly basis, leasing volume grew 14.7% to 523 units from 456 units in Q3 2023, as healthy demand for quality warehouse and logistics facilities persisted throughout 2023.
- As such, several industrial players officially opened and started operations in Singapore, having planned and prepared during the downcycle. For example, the highly anticipated Hyundai Motor Group Innovation Centre Singapore (HMGICS) located within the Jurong Innovation District (JID) was officially opened in November 2023. Occupying seven storeys and 935,384 sf of space, Hyundai Ioniq 5 EVs are produced here. Leica Microsystems, a medical technology firm, revealed its new S$82.1 million, 221,736 sf manufacturing and research and development facility in Jurong in October 2023. Other than manufacturing players, e-waste and battery recycler KGS opened its first battery recycling plant in Singapore in October, adding to the total of three battery recycling plants islandwide.
- With the relatively positive outlook at the closure of a quiet 2023, the overall industrial rental and price growth for 2024 is projected to be 3% to 5%. A more optimistic increase of 5% is likely for warehouses as demand remains intact for high quality storage spaces amid tight occupancy levels.
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