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Prices of industrial properties rose slightly in Q1 2015, while rents generally stabilized, according to the latest statistics from JTC.
Based on the revised property price index (PPI) for all industrial properties, overall prices increased by 0.7 percent on a quarterly basis and 0.5 percent year-on-year.
Specifically, prices of single-user factory space rose by 1.6 percent quarter-on-quarter and 3.1 percent on an annual basis. As for multiple-user factory space, prices inched up by 0.1 percent on a quarterly basis and 0.6 percent year-on-year.
According to Colliers International, the 0.7 percent increase in the overall prices reversed two consecutive quarters of decline. The positive movement is mainly attributed to the 1.6 percent quarter-on-quarter increase in the prices of single-user factories, as multiple-user factories only posted a marginal gain in values.
Meanwhile, the updated property rental index (PRI) for all industrial properties showed that overall industrial rents in the first quarter rebounded slightly by 0.4 percent following a drop of 0.6 percent in previous quarter. However, this translates to a 2 percent fall from the same period a year ago.
The quarterly rental recovery was led by the warehouse and business park segments, where rents increased by 0.6 percent and 0.4 percent respectively. Single-use factory space recorded a smaller rental hike of 0.3 percent, while multi-user factory space posted a minuscule gain of 0.1 percent.
Looking ahead, around 2.1 million sq m of industrial space is expected to enter Singapore over the next three quarters, including 420,000 sq m of multiple-user factory space. Additionally, 2.5 million sq m of industrial space is estimated to come onstream in 2016.
“This is significantly higher than the average annual supply and demand of around 1.5 million sq m and 1 million sq m in the past 3 years, and is likely to exert further downward pressures on occupancy rates,” JTC said.
Given the huge looming supply and the stiff competition for qualified tenants, rents of prime multi-user industrial space are forecasted to slide further by up to 4 percent in 2015, said Colliers.
“However, rents for business parks and independent high-specs buildings are expected to continue to buck the downward trend and strengthen by up to 3 percent and 6.5 percent in 2015, respectively, on the back of a tightening in supply.”
Furthermore, overall industrial prices could ease by as much as 3 percent this year, given the weak buying demand, rising interest rates, softening rents and the diverging price expectations of buyers and sellers in the strata-titled industrial segment, it added.
Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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