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Prices and rents of industrial spaces across Singapore dipped by 0.9 percent and 1.1 percent respectively in Q3 2017 compared to the previous three-month period, according to JTC’s latest Quarterly Market Report.
At the same time, occupancy rate dipped by 0.1 percentage points to 88.6 percent, while total industrial space increased by approximately 0.4 million sq m.
“JTC’s latest statistics showed that Singapore’s industrial property rent stayed soft and recorded its 10th straight quarter of decline. We are of the view that this is largely the result of supply rather than demand pressure,” said JLL’s Singapore Research Head Tay Huey Ying.
On an annual basis, rents and prices decreased by 3.2 percent and 7.4 percent respectively. Occupancy level also dropped marginally by 0.5 percentage points, while total industrial space surged by about 1.9 million sq m.
While all other types of industrial spaces recorded declines in rent and occupancy, the business park segment performed relatively well during the quarter. On a quarterly and yearly basis, this sector respectively posted a 0.3 percent and 2.5 percent rental growth, while occupancy rate improved by 0.2 and 4.8 percentage points to 85.9 percent.
“Similar to Q2 2017, the Business Park segment stood out as the star performer in Q3 2017. JTC’s statistics showed that the rent for Business Park space bucked the declining trend by posting its second consecutive quarter of increase on the back of the fifth consecutive quarter rise in occupancy rate amid stable supply stemming from a lack of new completion,” noted Tay.
In addition, she revealed that new demand for industrial spaces here reached 830,000 sq m in the first nine months of 2017, up 51.5 percent from last year’s 548,000 sq m.
Moving forward, JTC expects about 931,000 sq m of industrial space will be completed by Q4 2017, while around 1.4 million sq m will enter the market next year.
This means net new supply for the entire year would likely reach over 2 million sq m, a level not seen since 1997 when the supply rose by 2.1 million sq m, said Tay.
Given that the average annual demand and supply of industrial space had hit 1.3 million sq m and 1.8 million respectively and there is more incoming supply, JTC believes that prices and rents will continue to decline.
Nevertheless, Tay thinks that the whole of 2017 would record a lower rental decline compared to last year’s 6.8 percent contraction, while the business park segment would outperform the general market given steady demand amid a lack of supply.
This article was edited by Keshia Faculin.
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