SG industrial sector expands for 15th straight month in September
Singapore PMI recorded an expansion of 50.8.
The Singapore Purchasing Manager’s Index (PMI) for September saw an expansion of 50.8, which represented 15 consecutive months of expansion for the industrial sector.
Included in this improved performance was the island-wide median rent of multiple-user factory space. In the third quarter (Q3), this sector experienced growth for the first time in two years at 1.6% quarter-on-quarter to reach $1.80 per square foot (sf) per month.
The monthly rental activity also remained strong with a total of 1,809 rental transactions in July and August, representing a year-on-year increase of 14.7%, and a marginal increase of 0.4% from 1,801 transactions in April and May 2021.
Meanwhile, the Q3 ransactional activity in the multiple-user factory segment hit a lull, with only $309.5m transacted, led by the sale of a 10,000 sf freehold strata unit in Ann Chuan Industrial Building.
According to a report released by Knight Frank, the Singapore real estate sector is expected to experience continued growth.
Demand for pandemic-era goods is expected to be sustained. These goods include: bio-technology components, healthcare and sanitary goods, and electronics components for digital transformation, which will continue to draw high-value-added manufacturing investment to Singapore.
Whilst the amount of upcoming industrial space has dropped to 53.0 million sf gross floor area (GFA) by end-2025, new substantial supply of 18.8 million sf GFA and 17.3 million sf GFA are expected to complete in 2021 and 2022 respectively.
Nevertheless, healthy sustained demand and strong global manufacturing investment interest should allow rents to increase moderately between 1% and 3% for the whole of 2021 as expected. As Singapore stabilises from the fallout of the pandemic, factory prices and rents could potentially increase by 3% to 5% in 2022.