Industrial rents to grow 0%-3% in 2024: report

Savills cited three factors contributing to the projection.

Rents of industrial properties may increase between 0%-3% in 2024, according to Savills.

In a report,  Savills cited a slew of new developments, high operating costs and a challenging business environment worldwide as factors that will contribute to a moderate growth of industrial rents.

“Global electronics demand is anticipated to recover, which will likely see the manufacturing sector continue its expansion. This should lend some support to the demand for industrial space across the high-spec industrial and prime logistics segments,” Savills said.

In 2024, Savills also predicts that warehousing demand will remain strong.

“Singapore’s consumer spending growth may remain slow in 2024 due to inflationary pressures. As the capacity for consumption could be limited in the near term, businesses are less likely to need more industrial space for goods,” the expert said.

Compared to warehouses, however, Savills projects that rent for the multiple-user factory segment will grow at a faster rate of 2.3% QoQ.

“The flight-to-quality trend amongst tenants has been seen across global markets and is taking place almost regardless of sector, with businesses opting for high-quality, high-specs real estate that meets ESG, wellness and people-focused goals such as green certification or more modern buildings,” said Alan Cheong, executive director, Research & Consultancy, Savills Singapore.