Comments on JTC Q3 2020 Industrial property statistics

Rents and Occupancy Rate
Future supply
Macro environment

SINGAPORE, 22 October 2020 --

Tricia Song (宋明蔚), Head of Research for Singapore at Colliers International:

Rents and Prices of the overall industrial property market fell at a faster pace in Q3 while occupancy improved across all segments, except Single-User Factory segment.

Overall, we are cautious about Singapore industrial market and forecast the general industrial market to remain weak for the rest of 2020.

Data centres and the high-specs segments could be more resilient as they benefit from the growing Technology sector. Warehouses could some see support from the rise in ecommerce driving demand for logistics services. We expect a recovery in tandem with the general rebound in the economy in 2021 and beyond.

Rents and Occupancy Rate

The All-Industrial rental index declined 0.9% quarter-on-quarter (QOQ), after falling 0.7% in Q2 and 0.1% in Q1 2020. The decline was on the back of weaker rents at the multi-user factory (-1.1%) and warehouse (-1.1%) segments. Business Parks were not spared either, with rents declining by 1.0% QOQ. This marks the highest quarterly decline of the All-Industrial rental index since Q3 2017 and brings the All-Industrial rental index to a level at 15.0% below the peak in Q2 2014.

That said, overall occupancy rate improved 0.2 percentage point (ppt) to 89.6% in Q3 2020 from 89.4% in Q2 2020. This was driven by an increase in demand for warehouse space (+0.8ppt occupancy increase) for storage needs during the quarter, amid a delay in new completions. Other segments also saw an improvement in occupancy levels, except for single-user factory.


The single-user factory segment saw rental declines slowing at -0.7% QOQ compared to Q2 2020’s -1.0% QOQ, while occupancy slid marginally by 0.1ppt to 91.0% as net new demand turned negative.

Multi-user factories saw an opposite trend, with rental declines accelerating to -1.1% QOQ from -0.5% QOQ in the last quarter, and occupancy improving by 0.3ppt to 87.8%. All planning regions saw a decline in rents, with the worst decline seen in the East and West, both at -1.3% QOQ.

Business Park

Business park rents fell by 1.0% QOQ in Q3 2020 versus -0.2% QOQ in Q2 2020. While rental declines have accelerated, business park continues to be the most resilient segment year-to-date, with rents declining 1.2%, as compared to a decline of 1.5%-2% seen in other segments. Occupancy rate expanded by 0.2 ppt QOQ to 85.4% as net new demand turned positive after staying negative for two consecutive quarters.


Demand for warehouses continued to be strong, with 0.9 million sq ft of net new demand seen in Q3 2020. While lower than last quarter’s high of 1.3 million sq ft driven by national stockpiling goods and accelerated ecommerce growth, it is still higher than the average level of 150,000 sq ft seen from Q4 2018 – Q1 2020.

With limited new completions during the quarter, this demand has driven down the vacancy rate to 10.9% from 11.7%. Rents, however, surprisingly came off 1.1% QOQ and 1.4% year-on-year (YOY), probably due to landlords prioritizing occupancy over higher rents, especially in a time of crisis.


The All-Industrial price index fell 2.2% QOQ in Q3 2020, dragged by the multi-user factory segment which saw a 2.2% QOQ decline, while single-user factory also witnessed a -1.9% QOQ decline. Declines were once again more pronounced than the previous quarter, which saw the all-industrial prices fall 1.1% QOQ in Q2.

The price decline is despite the higher transaction volume of industrial properties in Q3, which nearly tripled QOQ to 320 caveats from 112 caveats lodged in Q2 2020 and rose 32% from Q3 2019’s 242 caveats. The higher volume is due to pent-up transactional demand following the lifting of the COVID-19 circuit breaker measures, and probably some distress cases.

We note that the price index for multiple-user factory has not seen an improvement in prices for eight consecutive quarters. In Q3, the West and Central regions saw the largest declines at -4.0% QOQ and -2.9% QOQ respectively .

Future supply

In Q3 2020, only approx. 258,333 sq ft (24,000 sqm) of new industrial space were completed, the lowest quarterly completion on record and a significant reduction from the average quarterly completion of around 2.9 million sq ft (270,000 sqm) in the past 3 years.

Around 6.45 million sq ft (0.6 million sqm) of industrial space are scheduled to be completed in Q4 2020, of which 58% will be in single-user factory, 29% in warehouse and the remaining 13% in multi-user factory and business park space. This is a sharp reduction from the previously expected approx. 13.99 million sq ft (1.3 million sqm) of stock to be completed in H2 2020 as reported in Q2 2020.

Completion of approx. 7.53 million sq ft (0.7 million sqm) of new industrial spaces has been delayed into 2021 and 2022 due to the pandemic’s impact on the construction sector. We note that this is the second quarter JTC has marked down estimates for supply completions significantly.

According to JTC, further delays in completion for some industrial building projects are expected, as project owners and contractors adjust to meet BCA’s Safe Restart requirements. Based on JTC’s forecasts, average industrial supply between Q4 2020-2024 is now approx. 12.9 million sq ft (1.2 million sqm), compared to the annual average supply and demand of industrial space, both around 8.61 million sq ft (0.8 million sqm) in the last three years.

Macro environment

Based on advance estimates from the Ministry of Trade and Industry (MTI), Singapore’s economy rebounded in Q3 2020 as GDP rose by 7.9% QOQ seasonally adjusted, as compared to the 13.2% QOQ plunge in Q2 2020.

This follows the end of the Circuit Breaker lockdown on 1 June 2020, after which Singapore gradually re-opened economic activities that do not pose high risk of transmission. On a YOY basis, the economy shrunk by 7.0% in Q3 2020, a stark improvement from Q2 2020’s 13.3% decline.

The rebound was driven by the manufacturing sector which has fully recovered, growing 3.9% QOQ and 2.0% YOY, versus a 44.7% and 8.0% YOY decline for construction and services sector respectively.

As of 14 October 2020, Oxford Economics reported that they will lower their 2020 GDP growth forecast by at least 0.3ppts below the current baseline of -5.7% as the Q3 2020 GDP growth outcome fell short of expectations due to sharply weaker construction activities.

That said, Oxford Economics expect the construction sector to rebound sharply in Q4 2020 after movement restrictions on foreign worker dormitories were lifted on 12 Aug 2020. Moreover, the authorities have reopened borders with several countries for business travel, and in some cases for short-term visitors (Australia, Brunei, New Zealand, Vietnam).


The rapidly evolving COVID-19 situation is expected to weigh on Singapore real estate sector, although the industrial property market has proven to be relatively more resilient than the retail and hospitality sectors with the recovery of the manufacturing sector, in particular in the electronics and precision engineering clusters.

As the impact on manufacturing sectors are uneven, we expect overall demand for general factory space to remain weak in the near term. While a delay in supply completions provides some relief to what would have been potentially a supply glut, factory rents are likely decline more than other segments in 2020, especially for older spaces in remote locations.

Warehouse rents are likely to be more resilient than other sectors. Warehouses have benefited from increased ecommerce and stockpiling during the COVID-19 Circuit Breaker in Q2 2020. In Q3 2020, while online sales as a proportion of total retail sales have retracted from May’s 24.5%, the stabilised proportion of about 11% in July and August is still significantly higher than pre-COVID levels of about 5-8%.

We believe ecommerce will be a long-term growth driver for logistics space. We note that there is still ample available stock; as vacancy continues to improve below its current 10.9% level, we expect warehouse rents to stabillise in 2020 and to recover from 2021 onwards.

For business park and high-spec segments, we expect rents to recover in 2021 after a marginal decline in 2020, supported by the Technology, Media and Telecommunications (TMT) sector and a recovery in business confidence. Newer and city-fringe business parks and high-spec industrial spaces should enjoy more resilient demand due to their premium specifications, connectivity and limited supply.

In our ‘Resilience and Rebound Ranking’ report launched recently, the manufacturing and technology sectors rank top for faring well historically after crises, as well as for future earnings growth. This bodes well for industrial space. Business parks, logistics spaces and data centres benefit most from increased R&D, ecommerce adoption and increased data broadband usage respectively. 


Colliers Research Singapore comments on JTC Industrial index Q3 2020
JTC Industrial Property Statistics for Q3 2020




Media Contact:

Annabelle Taylor