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Prices and rentals of industrial space continued to moderate in Q2 2014, on the back of falling industrial occupancy rates, according to a JTC report.
Notably, prices of industrial space marginally increased by 0.7 percent quarter-on-quarter in Q2 2014.
“However, for 1H 2014, the All Industrial Property Price Index rose 4.5 percent, which is faster than the full year 3.2 percent price gain in 2013,” said Ms Chia Siew Chuin, Director of Research & Advisory at Colliers International.
“This was predominantly driven by the 6.5 percent rise in multiple-user factory prices in 1H 2014. Prices of multiple-user warehouse premises fell 3.7 percent during the same period. In 2013, prices of multiple-user factory and warehouse space rose by 3.2 percent and 2.6 percent, respectively,” she added.
Meanwhile, rents of industrial space moderated in Q2 2014, falling by 0.1 percent on a quarter-on-quarter basis.
Specifically, rental growth in the multiple-user factory segment has slowed from 4.4 percent in H1 2013 to 2.9 percent and 1.3 percent in H2 2013 and H1 2014, respectively. Rents of multiple-user warehouse space contracted by 4.6 percent in the first half of the year, compared to the 6.6 percent gains recorded in H1 2013 respectively.
Chia noted that the latest rental trend “is in line with the third consecutive quarter of decline in the islandwide occupancy rate – a seven-year low of 90.7 percent as of Q2 2014, as the increase in available industrial space at 1.6 percent quarter-on-quarter exceeded the 0.6 percent rise in occupied stock during the quarter.”
She added that the last time islandwide occupancy rate fell below the 91 percent mark was in Q2 2007 at 90.6 percent.
Looking ahead, Chia expects the industrial property market to be mixed in 2H 2014.
“In the strata-titled industrial sales segment, the price standoff between buyers and sellers would likely keep transaction volume at depressed levels, unless one party gives way. However, prices of industrial properties with longer tenure are expected to hold up better due to their scarcity.”
She also expects the leasing market to witness healthy activity levels, in terms of both enquiries and committed deals, over the next six months.
But with industrialists expected to be cost-conscious, overall industrial rents will likely remain stable or ease marginally over the next six months, she said.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
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