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by Cheryl Tay
The further increase in prices of multi-user factory and warehouse spaces reflect a strong demand from investors looking to go into the industrial sector, according to Knight Frank.
Despite macroeconomic uncertainties, transacted prices for new and resale strata industrial projects continued to surge upward and remained resilient for H1 2012.
“Amidst rising business costs faced by industrialists as industrial land prices and rentals escalated, the Ministry of Trade and Industry (MTI) has announced on 12 June 2012 that the maximum tenure for industrial sites released under the 2H2012 Government Land Sales Programme will be halved to 30 years from the current 60 years,” said Knight Frank.
In the secondary market, Knight Frank’s analysis for the past four years revealed that prices of 30-year leasehold industrial properties increased 43 percent quarter-on-quarter in Q2 2012 to S$298 psf, while prices of 60-year leasehold industrial properties remained unchanged at S$398 psf.
“Consequently, the price gap between 30-year and 60-year leasehold industrial properties has narrowed considerably in Q2 2012,” said Knight Frank.
The Sembawang and Bukit Merah (pictured) Planning Areas were the main locations of the resale transactions for 30-year leasehold units.
The average price for 99-year leasehold strata units declined to S$432 psf, while the average price for freehold units increased 17 percent within three months, exceeding the S$600 psf mark in Q2 2012.
Bukit Merah and Clementi Planning Areas were the major locations of 99-year leasehold transactions. Freehold transactions were mainly in Toa Payoh, Geylang and Queenstown Planning Areas.
“The diverging price trend between 60 year / 99-year leasehold and freehold strata units reflects growing investment interest for freehold industrial properties,” added Knight Frank.
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