Bookmark & Share
Overall demand for upper-floor strata-titled factory space declined by 13.6 percent on quarter and 41 percent on year in Q1 2016 to 108 caveats—or the lowest level in 10 years—according to a report from Knight Frank.
Although resale transactions for such properties held fairly steady at 103 caveats, there were only five caveats lodged for the sale of new units, and the latter mostly involved 30-year leasehold factory space at Mandai Connection. There were also no subsale deals for this segment during the first quarter
In contrast, the sale of freehold industrial units increased by 40 percent on a quarterly basis to 21 caveats, but leasehold transactions fell 27 percent to 70 caveats.
For the upper-floor strata-titled warehouse segment, only seven caveats were lodged during the said period and all were resale deals.
At the same time, average price for upper-floor strata-titled factory space dipped by 1 percent quarter-on-quarter to S$422 per sq ft. This was mainly due to the 13.9 percent price drop to S$225 per sq ft for resale factory units with lease tenures of 30 years and below.
On the other hand, the average price of resale freehold factory units rose 1.8 percent to S$425 per sq ft as there were more higher-priced secondary transactions for such properties in Q1 2016.
For the upper-floor strata-titled warehouse segment, the average price climbed 7.2 percent on a quarterly basis to S$567 per sq ft due to higher-valued sales of 60-year and freehold units in the Central Region.
Meanwhile, island-wide rent of upper-floor industrial units slid 1.2 percent in Q1 2016 compared to the previous quarter.
In particular, the Pioneer – Tuas cluster witnessed the largest quarterly decline of 8.3 percent to S$1.77 per sq ft amidst the ample supply of strata-titled industrial spaces and a limited pool of tenants.
“With falling average rents, more tenants are on a close look-out for better-located industrial units, especially those properties equipped with good building specifications,” noted Knight Frank.
The property consultancy also said investors have also started seeking good acquisitions given the falling prices.
“Although industrialists remained fairly cautious towards business expansion, there are signs of deep-pocketed industrialists sourcing for value-buys, especially industrial properties with longer lease tenures (particularly freehold) and better building specifications.”
According to Knight Frank Singapore Executive Director & Head (Industrial), Tan Boon Leong, this presents an opportunity for developers to clear their unsold strata-titled units.
This is because the future supply of such spaces could taper over time in light of the limited number of sizeable sites up for sale under the Industrial Government Land Sales (IGLS) for 1H 2016.
Looking ahead, overall rents are expected to moderate by between 5 percent and 10 percent for the whole of 2016, given the large upcoming supply of 26.2 million sq ft this year and the prevailing cautious sentiment among industrialists.
Average prices for leasehold factory and warehouse units could also soften by 5 percent to 7 percent on an annual basis this year while that for freehold factory and warehouse could hold steady on the back of limited supply.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
Related Articles:
Singapore remains most attractive for infrastructure investment: report