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Prices of industrial space declined in the fourth quarter of 2015, with multiple-user factory space and single-user factory space falling by 1.0 percent to 2.2 percent quarter-on-quarter, JTC revealed in its latest industrial property market statistics released Thursday (28 January).
For the whole of last year, price indices of overall industrial space, multiple-user factory space and single-user factory space fell by 1.7 percent to 1.8 percent.
Specifically, price indices of multiple-user factory space saw declines in most planning regions averaging 1.3 percent to 3.1 percent, except in the Central region where it saw a slight increase of 0.2% on a quarter-on-quarter basis. The movement of price indices of multiple-user factory space based on land-use zoning also saw a decline, with both the price index of Business 1 (B1) and Business 2 (B2) multiple-user factory space falling by 0.2 percent and 3.1 percent on a quarter-on-quarter basis respectively, the statutory board said.
Meanwhile, industrial space rents also declined in Q4.
On a quarter-on-quarter basis, the rental indices of the overall industrial space, multiple-user factory space, single-user factory space and warehouse space fell by 1.1 percent to 1.5 percent while the rental index for business park space remained unchanged.
Commenting, Cushman & Wakefield Director of Research Christine Li said: “Business park rents fared relatively better with a full year drop of 1.2 percent. This is due to an increasing number of firms seeking decentralised spaces for cost-saving amid challenging business environment. We expect business park rents to dip by approximately 1 percent in 2016, on the back of healthy demand for business park space and a lack of business park completions post-2016.”
Similarly, rental movements of multiple-user factory space saw a decline in all planning regions 0.3 percent to 2.9 percent on a quarter-on-quarter basis. Rental movements of multiple-user factory space based on land-use zoning also saw a decline, with B1 and B2 multiple-user factory spaces falling by 1.3 percent and 0.7 percent, quarter-on-quarter respectively.
Looking ahead, market experts expect the industrial market to continue facing challenging market conditions this year.
Li said: “Local companies especially the SMEs could be more cost-sensitive and taking a wait-and-see attitude with regard to expansion given the uncertain economic outlook. We expect overall industrial rents to ease by another 2 to 4 percent in 2016 before stabilising towards the later part of 2017. High value-added manufacturing in niche areas such as specialty chemicals could lend support to high-tech rents, resulting in a lesser degree of moderation for this segment.”
But while the industrial sector is expected to face significant headwinds in the short-term, Li said: “the signing of the Trans-Pacific Partnership Agreement along with Singapore’s continued rise as a regional logistics hub is expected to boost trade volumes and could bolster industrial rental growth in the long run.”
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg