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Despite lacklustre manufacturing growth, the number of leasing transactions in Singapore’s industrial property market jumped by 24 percent to 2,317 in Q2 2015 on a quarterly basis, revealed a Savills report.
However, compared to the same period last year, leasing volume increased by just 8.8 percent. This is attributed to rental renewals rather than new take-ups.
During the period, several manufacturers also announced their plans to downsize or exit the market. For instance, Japanese petrochemicals giant Teijin will close its local plant by year-end, and rigging equipment firm KTL Global will relocate its manufacturing operations to Johor Bahru.
Nevertheless, monthly rents of factories/warehouses held steady at S$1.85 per sq ft, while that for high-tech premises were unchanged at S$3.00 per sq ft.
Meanwhile, sales of strata-titled factories and warehouses rose by 21 percent quarter-on-quarter with 408 caveats filed as of 24 July, but this is still 24.6 percent lower than the figure seen a year ago.
“The diminished interest in industrial properties comes on the back of the sluggish performance of the manufacturing sector. Industrialists are saddled with several issues, including rising labour costs, fears of the Fed’s interest rate hike and weak commodity prices,” said Savills.
Despite these challenges, prices of 60-year leasehold upper-storey factories and warehouses climbed by 4.6 percent on a quarterly basis to S$485 per sq ft, while that for its freehold counterparts edged up 0.3 percent to S$660 per sq ft. In contrast, prices of 30-year leasehold units dipped by 1.8 percent to S$370 per sq ft.
Meanwhile, the Business Park segment saw 75 leasing deals during Q2 2015, up from 59 in the previous quarter. Overall vacancy rate also declined further by 2.3 percentage points to 14.7 percent thanks to healthy absorption of recently-completed projects at Science Park, One-North and Changi Business Park.
Looking ahead, rents of industrial premises are expected to remain unchanged or fall up to 1 percent for 2015. On the other hand, prices of 30-year and 60-year leasehold space as well as freehold properties are projected to rise by 0.5 percent, 1 percent and 3 percent respectively.
On the Business Park front, a total of 3.7 million sq ft of space is expected to enter the market from Q3 2015 to the end of 2016, but beyond that period the amount of upcoming supply is unknown, Savills said.
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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