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The sale of strata industrial properties declined by 20.7 percent year-on-year to 849 units in 2016, marking its fourth consecutive yearly decline since the market peaked in 2012, reported the Business Times, citing the number of caveats lodged.
According to experts, the proportion of new units slumped amid a dearth of launches, with transactions involving new industrial properties accounting for only 16 percent of overall sales last year, compared to 54 percent four years ago.
“There was a reduced number of new-sale projects in the market compared to the boom period pre-2014, and coupled with industrial end-users’ greater preference for longer-lease tenures, new sale strata-titled projects generally saw greater headwinds in sales performance,” said Alice Tan, Research Head at Knight Frank Singapore.
Nevertheless, she expects demand for resale units to increase modestly as sellers become more realistic with their valuations, and falling prices may attract genuine end-users to enter the market this year.
Tan added that institutional investors, who are scouting for assets capable of generating high yields over the long term, are beginning to consider industrial properties this year.
However, SLP International’s Executive Director, Nicholas Mak, believes the lack of new launches and the higher borrowing cost in 2017 could drag down overall demand, on top of the property cooling measures that continue to curtail investor appetite.
Nonetheless, resales of new completions could see an uptick in 2017, said Mak. Among the developments expected to obtain their Temporary Occupation Permit (TOP) this year are Mega @ Woodlands, Proxima @ Gambas and West Star at Tuas Bay Close.
Meanwhile, Alan Cheong, Research Head at Savills Singapore, forecast that prices of strata industrial properties could fall by five to 10 percent in 2017 due to the lack of demand, “especially when the oil and gas sector has not recovered”.
Tan Boon Leong, Knight Frank’s Head for Industrial, expects a larger correction of eight to 10 percent for rents and prices of such properties, compared to the eight to nine percent drop in 2016. But long-term units like 60-year leasehold or freehold properties near MRT stations will unlikely suffer such a large decline.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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