APPD Market Report Article


September 4, 2023

Doreen Goh, Director - Research & Consultancy, Singapore


SGD 1.61


Rising unfulfilled space requirements

  • The supply crunch is contributing to a growing pool of unfulfilled demand.
  • Notably, CEVA Logistics has renewed the lease for its existing warehouse space of 31,230 sqm (approximately 336,200 sq ft) at 15 Greenwich Drive for a three-year term with ESR-LOGOS REIT.

Low supply pipeline of new multi-tenanted developments

  • There were no new multi-tenanted logistics/warehouse completions in 2Q23, and the near term supply pipeline remains low.
  • Landlords continued to explore redevelopment and refurbishment opportunities for their existing developments. During the quarter, ESR-LOGOS REIT unveiled that it has signed a non-binding Heads of Agreement with a master tenant for the proposed redevelopment of 2 Fishery Port Road into a ramp-up modern cold storage facility, with construction expected to start in 4Q23.

Yields hold steady on healthy investor demand

  • The persistent supply crunch pushed rents up for the ninth consecutive quarter. This, coupled with healthy investor demand, supported capital value growth, keeping yields of logistics/warehouse assets steady despite the current high interest rate environment. 
  • In 2Q23, Hillhouse Capital paid SGD 313.50 million for ESR-LOGOS REIT’s portfolio of five warehouses at 3 Pioneer Sector 3, 21 Changi North Way, 6 Chin Bee Avenue, 4 & 6 Clementi Loop and 30 Toh Guan Road.

Outlook: Rents and capital values to rise, but at a slower pace

  • Rents are expected to stay on the uptrend, although escalating headwinds, including the weakening manufacturing output and non-oil domestic exports, could slow growth in the coming quarters.
  • Investors are likely to continue to be drawn to the logistics/warehouse asset class due to the positive yield spread over interest rates. Along with the prospect of continued rent growth, this should keep yields steady and support capital value growth. 

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

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