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Overall Outlook
Key observations
New supply delivered in FY24 was significantly lower than earlier estimates of more than 2.0mn sqm. The industrial property market in FY24 saw the completion of only 467,000sqm of new supply, significantly lower than the c.1.0mn sqm annual average of the past three years. The single-user factory and warehouse segments contributed the highest new supply in FY24, reflecting sustained demand from industrialists and the logistics sector. New supply of multi-user factory space remained relatively subdued, with only c.41,000sqm of new space added during the year. The bulk of new supply for business parks came in 4Q24 with the completion of the first phase of the Punggol Digital District.
Looking ahead to FY25, an estimated 1.2mn sqm of industrial space is expected to be delivered, with 38% allocated to warehouse space, reflecting ongoing strength in the logistics sector. The single-user factory segment is projected to make up 25%, while business parks and multiple-user factories will account for 19% and 17%, respectively. The pipeline for FY26 and FY27 suggests continued delivery of new supply, averaging 1.1mn sqm annually.
Rents continue to grow but at a more normalised rate. The rental index for all industrial space grew by 0.5% q/q in 4Q24, bringing the annual increase to 3.5%, significantly lower than the 8.9% growth recorded in FY23. This marks the slowest annual rental growth since FY21, as the market absorbed the recent influx of new supply, and rents normalised. While rental demand remained stable across segments, multiple-user factories and warehouses recorded 0.4% and 0.9% q/q rental growth, respectively. Business parks also exhibited some rental growth of 0.2% q/q, reversing the decline in rents seen in the previous two quarters.
Going forward, the supply-demand balance is expected to keep rental growth in check, particularly in segments with higher vacancies such as business parks, where the occupancy rate fell by 0.9ppt in 4Q24. However, warehouses may see continued rental resilience as logistics remains a bright spot in industrial real estate.
Singapore PMI continues to expand for the 17th consecutive month. Singapore’s overall factory activity hit a six-year high in December 2024, but slightly reduced to 50.9 in January 2025. Although the PMI recorded its 17th consecutive month of growth in January 2025, it fell by 0.2 points. While electronics remained the main driver of the expansionary PMI, it slipped by 0.3 points. Economists believe that the slower growth in Singapore and most other ASEAN countries was due to uncertainty brought about by the looming tariffs to be imposed by the Trump administration. Seasonal factors such as the Chinese New Year holidays in January could also have been a factor for the slightly lower readings. The only sub-index that contracted was for stocks of supplier deliveries. Several economists pointed to the ongoing geopolitical tensions and trade wars that may negatively impact Singapore’s small open economy. While most agree that it may still be too early in the year to tell, they believe that Singapore’s GDP growth in FY25 will be below the 4% growth recorded in FY24.
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The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). This report is intended for “Accredited Investors” and “Institutional Investors” (defined under the Financial Advisers Act and Securities and Futures Act of Singapore, and their subsidiary legislation), as well as “Professional Investors” (defined under the Securities and Futures Ordinance of Hong Kong) only. It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose.
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DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 13 th Floor One Island East, 18 Westlands Road, Quarry Bay, Hong Kong Tel: (852) 3668-4181, Fax: (852) 2521-1812
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DBS Bank Ltd
12 Marina Boulevard, Marina Bay Financial Centre Tower 3
Singapore 018982
Tel. 65-6878 8888
Company Regn. No. 196800306E
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