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Singapore’s industrial real estate market is expected to remain weak next year due to a lacklustre outlook for the manufacturing industry, JTC’s curbs against speculators and its expected release of more supply, according to media reports.
Nevertheless, some types of industrial properties like warehouses, food factories, business parks and high-specification factories could post stable rental growth and strong take-up due to limited supply, and patronage by lucrative sectors such as biomedical and petrochemical firms.
Additionally, capital values of freehold factories and those with long tenures of between 60 to 999 years are likely to be upheld, on the back of growing scarcity amid the recent prevalence of leasehold industrial projects with leases of slight above 20 years.
Similarly, the prospect for business parks is promising as they are seen as a cheaper alternative to the pricier office spaces in the Central Business District, making them suitable premises for support or back-end departments. As for warehouses, they are expected to remain sought-after in light of the flourishing e-commerce scene.
However, the prospect for other types of industrial real estate is bleak, especially for multi-user and ready-built factories, which usually accommodates SMEs and non-lucrative industries.
This is particularly true for properties that house businesses that require many workers and those that have a local or small regional market because they will continue to be squeezed by the government’s curbs on foreign manpower, according to CBRE’s Research Head for Southeast Asia Desmond Sim.
It is also said that rents are likely be dragged by the upcoming supply of 2.6 million sq m of factory space next year, aggravating matters, which could lead to declining rents.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg.
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