APPD Market Report Article


February 22, 2024

Doreen Goh, Director - Research & Consultancy, Singapore


SGD 1.67


Demand holds steady in 4Q23

  • Unfulfilled requirements from logistics service providers and end-users continued to underpin demand for ambient and cold logistics space. Several businesses also unveiled their new premises during the quarter.
  • For example, DHL Supply Chain announced its new 17,000 sqm (around 183,000 sq ft) DHL West Hub located on the third floor of 2PS1. Separately, Star Living (a local furniture player) officially opened its new seven-storey 19,050 sqm (about 205,000 sq ft) headquarters in Sungei Kadut, which houses its corporate office, fully automated warehouse and furniture showrooms.

Meeting immediate space needs remains challenging

  • For the third consecutive quarter, there were no new multi-tenanted warehouse completions for lease, keeping vacancy tight.
  • Meanwhile, redevelopment of the warehouses at 5 Toh Guan Road East has commenced, with demolition works starting in 4Q23. As part of its asset rejuvenation plans, CapitaLand Ascendas REIT is redeveloping the property into a brand new ramp-up logistics facility targeting completion by 4Q25.

Eleventh consecutive quarterly rise in rents and capital values

  • The average islandwide logistics/warehouse rent and capital value rose for the eleventh consecutive quarter, underpinned by the persistently tight space availability and healthy buying demand for logistics/warehouse properties. With capital values rising at the same pace as rents, this kept yields steady in 4Q23.
  • There were three major logistics/warehouse transactions worth at least SGD 5 million each in 4Q23. The warehouse at 9 Pioneer View fetched SGD 58.50 million, while the warehouses at 29 Tuas Avenue 11 and 12 Gul Drive changed hands for SGD 11.00 million and SGD 6.50 million, respectively.

Outlook: Growth in rents and capital values to taper further

  • There are limited new multi-tenanted logistics/warehouse completions expected in 2024. On the other hand, supply chain disruption risks arising from the geopolitical tensions are anticipated to keep inventory holding elevated and support demand for logistics/warehouse space.
  • The foreseen tight vacancy and sustained buying demand for logistics/warehouse assets should keep rents and capital values on an uptrend. However, considering the effect of occupier rent-hike resistance and the higher-for-longer interest rate outlook, we expect the average islandwide logistics/warehouse rent and capital value to rise at a slower y-o-y pace and yields to stay stable in 2024.

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

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