The fourth quarter of this year saw the lowest industrial sales volume since Q2 of 2020, totaling $715.1 million

Deals for investment in industrial real estate decreased in 4Q2022 due to a more uncertain economic outlook and a decline in business confidence, according to the Knight Frank Singapore 4Q2022 industry and logistic research study.

In total, $715.1 milllion in commercial sales were recorded in the 4Q2022 period. Based on Knight Frank, this is the lowest volume for a quarter since 2Q2020 when $324.8 million of sales were registered at the beginning of the pandemic.

TMW Maxwell in Maxwell Road will also benefit from the planned rejuvenation of Tanjong Pagar and the planned developments of the Greater Southern Waterfront precinct.

The most notable transactions of this quarter comprised selling Enterprise Logistics Centre, a two-storey ramp-up warehouse located in Tuas in the city of Tuas, at $120.6 million during November and the selling of two industrial sites at 10 , 12 and Mandai Estate at $100 million during December. Knight Frank highlights that other deals in the quarter were mostly smaller, with 97.2% of the caveats that were filed during 4Q2022 being transactions that were less than $10 million.

The drop in transaction volumes is due to a slowdown in manufacturing. In 4Q2022, growth in GDP in the manufacturing industry slowed by 3% in contrast to previous 1.4% growth recorded in the preceding quarter. “The decline in the global demand for semiconductors has impacted the electronics sector and the overall , declines in the chemicals and biomedical clusters hindered development in the 2nd quarter of the year.” Says Norishikin Khalik. director of strategy and solutions for occupiers in Knight Frank Singapore.

The lower growth of manufacturing and concerns about recession have weighed on business optimism. According to the Singstat 4Q2022 business Expectations Survey, Knight Frank says that more manufacturing firms that were surveyed expect a less favorable business outlook for the period between the months of October 2022 and March 2023 as compared with the prior quarter’s survey. Furthermore the Singapore Purchasing Managers Index (PMI) is which is a monthly survey of purchasing managers from private manufacturing companies and companies, reported an eighth consecutive month of decline during December of 2022.

However, despite the fact that sales decreased, leasing transactions for industrial use continued to be relatively steady in the months of November and October 2022. driven by companies that specialize in general production, manufacturing related to construction transportation engineering as well as precision engineering. Median rents of multi-user factories has increased by 8.7% y-o-y to $1.94 per sq ft per month, which equates to 1,571 tenancies, according to Knight Frank.

Despite the headwinds, Singapore continues to attract fixed asset investment to industry. Manufacturing fixed asset investments decreased between $3.6 billion at the end of 2Q2022 and $411 million in 3Q2022, a number of manufacturing facilities that are new are currently in the pipeline. The most notable is an $600 million semiconductor plant located in Tampines through Applied Materials and a $571 million extension of Soitec’s Wafer Fab Park in Pasir Ris.

In the future, Norishikin anticipates industrial prices and rents to be stable with a modest growth of one% up to% in 2023. “In the logistics industry in which supply is scarce and warehouse space is in high demand, the rent for high-quality warehouse space could rise up to three% up to% over the next year,” she adds.