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Singapore’s strata-titled industrial property market turned more cautious in Q1 2014, with transaction volume for factory plunging by 48 percent quarter-on-quarter to 194 units or its lowest quarterly record since Q4 2008, according to a Knight Frank report.
Specifically, sales dropped 59 percent, 45 percent and 42 percent quarter-on-quarter for new sale, sub sale and resale markets respectively.
“The impact of Total Debt Servicing Ratio (TDSR) framework continued to dampen buying interest for industrial property, as some investors are not eligible for higher mortgage limits,” it said.
Despite the decline in transaction volumes, average price of strata-titled factories on upper floors (resale, subsale and new sale) continued an upward trend as it increased by 3.0 percent quarter-on-quarter in Q1, following a 4.4 percent quarter-on-quarter growth in Q4 2013.
The overall increase was primarily contributed by the resale market, which saw average price improve by 4.9 percent quarter-on-quarter in Q1 2014 compared to a price decline of 1.4 percent in the new sale market.
Moreover, sales volume of strata-titled warehouses space halved, with only 12 units sold in Q1 2014 compared to the preceding quarter’s 26 units.
Meanwhile, average rent of conventional industrial space climbed 2.6 percent in Q1 2014, albeit with varying rental growths for different clusters and stable performance of some underlying industries.
Moving forward, Knight Frank expects industrial landlords to be hard-pressed to lease out their available spaces, given the higher supply of industrial space and expected lower demand due to uncertain global trade performance as well as concerns over the cost competitiveness of Singapore.
Knight Frank also noted its forecast of seven to 10 percent rental contraction on an annual basis for 2014 remains unchanged.
Nikki De Guzman, Junior Journalist at PropertyGuru, edited this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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