APPD Market Report Article

Singapore

May 31, 2022

5.9%

SGD 1.43

Rents
Rising

3PLs, life sciences and e-commerce firms driving demand

  • Logistics/warehouse facilities experienced healthy demand in 1Q22, supported largely by requirements for general storage and cold/temperature-control purposes from third-party logistics service providers (3PLs), life sciences and e-commerce firms.
  • Fulfilment for larger space requirements, especially for 100,000 sq ft and above, remained challenging due to the lack of available options.

Limited new completions in 1Q22

  • Star International’s new purpose-built warehouse development in Sungei Kadut was completed in 1Q22.
  • Recently completed logistics/warehouse developments such as JTC Logistics Hub @ Gul (Phase 1) and LOGOS eHub (Phase 1) are already more than 70% taken up.

Rent rises for the fourth straight quarter

  • Driven by tight space availability, especially for better quality warehouse premises, the average islandwide logistics/warehouse rent appreciated for the fourth straight quarter in 1Q22.
  • Investors remained keen to acquire logistics/warehouse assets but availability of suitable assets for sale were limited. At the time of writing, there were only two transactions exceeding SGD 5 million in 1Q22, both involving freehold warehouses along Tagore Lane. The sale of Lam Chuan Building at 14 Tagore Lane fetched SGD 9.5 million, while 93 Tagore Lane sold for SGD 16.0 million.

Outlook: Potential for rents and capital values to climb further

  • We expect the tightness in space availability, especially for quality warehouse premises, to persist into the rest of the year. The global supply chain disruptions and geopolitical tensions could also lead to increased inventory holding and potentially stockpiling of essential items. This could accentuate the supply crunch and underpin further rent growth in the near term.
  • There is also potential for further capital appreciation as logistics/warehouse assets are expected to remain a sought-after asset class among investors but available stock for sale is foreseen to be limited.

Note: Singapore Logistics & Industrial refers to Singapore's islandwide logistics/warehouse market.

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