What's Happening?
Singapore's industrial property market has remained stable through the second quarter of 2025, despite a significant downturn in real estate investment across the Asia Pacific region. According to a report from Savills, APAC real estate investment fell to US$7.3 billion in Q2, marking a 36% year-on-year decline and pulling H1 volumes 27% lower than the same period in 2024. The decline was led by China, where investment dropped significantly, and Shanghai vacancies climbed to 26.2%. In contrast, Singapore's prime logistics yields stood at 6.50%, with a cash-on-cash yield of 10.9% and a typical loan-to-value of 55%. The cost of debt remained low, generating a healthy risk premium.
Why It's Important?
The stability of Singapore's industrial sector amidst regional investment declines highlights its resilience and attractiveness to investors. Singapore's unique land tenure model, with new industrial sites typically offering 30-year leases, contributes to its stable performance. The sector's ability to maintain healthy yields and low debt costs provides a competitive edge in attracting international investment. This stability is crucial for Singapore's economic growth and its position as a key player in the APAC region, especially as other markets face challenges.
What's Next?
A notable transaction in Singapore's industrial sector is Brookfield's $535 million acquisition of a Mapletree-owned industrial portfolio, marking the Canadian firm's first deal in Singapore. The assets include R&D-focused business parks and a high-tech industrial complex, expected to complete in Q3. This transaction underscores continued interest in Singapore's industrial market and may encourage further investments, bolstering the sector's growth and stability.
Beyond the Headlines
Singapore's industrial sector's resilience amidst regional downturns reflects broader economic strategies focused on long-term stability and growth. The country's approach to land tenure and investment in high-tech industrial complexes aligns with global trends towards innovation and sustainable development. This focus on stability and innovation positions Singapore as a leader in the APAC region, attracting international investors seeking reliable and profitable opportunities.
