SINGAPORE (THE BUSINESS TIMES) - Industrial rents for most segments in Singapore will moderate in 2020 as shrinking global demand takes its toll on the local manufacturing sector, Cushman & Wakefield said on Wednesday (April 15).
Location will be a big factor in determining rental growth of different micro markets during the Covid-19 outbreak, the real estate services firm added.
It expects factory rents and better-quality industrial buildings to be more affected by Covid-19 due to their outlying locations.
Cushman & Wakefield said the volume of new leases will fall as a majority of firms have shelved their plans to relocate and renewed their current lease instead.
"Businesses are unwilling to allocate any additional capex during this period," it noted.
However, it expects the degree of rental moderation for warehouse rents to be lower due to increased e-commerce activity and deliveries.
Christine Li, Cushman & Wakefield's head of research for Singapore and South-east Asia, said the controls on people movement have resulted in the unprecedented growth of e-commerce activity.
"Given the increased demand for delivery of online purchases of fresh food, medical supplies and general essential purchases, cold chain logistics facilities will probably register heightened leasing activity ahead," she added.
Meanwhile, Cushman & Wakefield noted certain positive market developments in the first quarter despite the ongoing virus outbreak.
These include the launch of GrabFood's 6,000 square foot cloud kitchen at Lam Soon Industrial Building, and German event organiser Deutsche Messe signing a memorandum of understanding to host its flagship manufacturing trade show in Singapore for an additional five years.
The trade show will enhance and accelerate the adoption of Industry 4.0 technologies among manufacturers across the Asia-Pacific, said Cushman & Wakefield.