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Singapore’s industrial property market saw fewer leasing deals in the fourth quarter of 2015 due to the traditional year-end holiday lull, effects of existing loan curbs and worries over global macroeconomic uncertainties and rising interest rate, according to a report by Colliers International.
Based on data from the Urban Redevelopment Authority’s Real Estate Information System (REALIS) as of 19 January 2016, the number of industrial rental transactions fell to 1,953 in Q4 2015 from 2,081 in the previous quarter. On the other hand, leasing volume reached a historic high of 8,353 for the whole of 2015 compared to 8,307 in 2014.
As for the movement of rental prices, it mirrored the trend in the previous quarter. They were flat or slightly declined in Q4 2015, as landlords prioritized retaining and attracting tenants, given clients’ cost sensitivity, stiffer competition for renters and the sluggish year-end period.
In the prime conventional factory segment, the average monthly gross rents of ground floor space dipped by 0.4 percent to S$2.50 per sq ft on a quarterly basis, while that for upper-level premises slid 0.5 percent to S$2.01 per sq ft. This brought the full-year rental declines for each property type to 1.2 percent and 2.9 percent respectively.
Similarly, rents for upper level prime conventional warehouses receded by 0.5 percent to S$1.89 per sq ft, meaning rents for such premises have fallen by 3.6 percent for the whole of 2015. Conversely, rents of ground-level space were unchanged at S$2.49 per sq ft.
“Within the high specification industrial space category, business park rents dipped for the second successive quarter by 0.2 percent to $4.15 per sq ft as of Q4 2015. Notwithstanding the easing of rents in H2 2015, the average business park rent as of Q4 2015 was still up by 1.0 percent year-on-year.”
In contrast, the average monthly gross rents of independent high spec premises continued to buck the trend thanks a dearth in supply. Rents held steady at $3.31 per sq ft for ground-level space and $3.13 per sq ft for upper-level premises for the second consecutive quarter. But on an annual basis, rental prices for each property type rose by 3.4 percent and 5.4 percent respectively.
Looking ahead, rents for prime multi-user conventional industrial space and prime multi-user conventional industrial premises are forecasted to decline by as much as 2.0 percent each in 2016 amidst the challenging business environment.
On the other hand, rents for multi-user high specs premises could see some upside as new developments completing this year are expected to command higher rents.
“As such, for the whole of 2016, the average islandwide business park rent could appreciate by up to 3.5 percent, while rents for independent high specs premises could rise by up to 1.0 percent,” added Colliers International.
Nikki De Guzman, Editor at CommercialGuru edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg