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Singapore’s industrial property market saw an improvement in Q1 2018, with the rate of decline in prices and rents easing, according to JTC’s latest Quarterly Market Report.
For instance, island-wide rents and prices fell year-on-year by 2.0 percent and 3.6 percent respectively during the period. In comparison, these dropped by 2.8 percent and 5.7 percent on an annual basis in Q4 2017.
Moreover, rents of multiple-user factories were unchanged quarter-on-quarter in Q1 2018 following 11 straight quarters of decline. Rents of warehouses also dipped by 0.3 percent on a quarterly basis, down from a 1.0 percent drop in the previous quarter, said Brenda Ong, CBRE’s executive director for advisory & transactions, industrial & logistic service.
“This implies that the correction in the industrial market is slowing, driven by optimism in industrial production performance, and moderating industrial supply.”
Interestingly, the business park segment was the only industrial property category that posted rental growth in Q1 2018, with rental gains accelerating from 3.3 percent year-on-year in the prior quarter to 6.9 percent.
It is also the only sub-market that saw an improvement in occupancy, with the rate rising by 1.1 percentage points on an annual basis to 85.1 percent, albeit slower than the gain of 3.6 percentage points in the previous quarter.
While the overall occupancy level of industrial properties dipped by 0.4 percentage points year-on-year to 89 percent in Q1 2018, it is slightly better than the 0.6 percentage point dip in Q4 2017.
Furthermore, Ong noted that the occupancy level in multiple-user factories remained stable at 86.5 percent due to higher production output from electronics and precision engineering businesses in the first quarter.
“Should occupancy continued to improve, this will help alleviate the downward pressure on rents, leading to the stabilising of rents over the course of 2018,” she added.
Meanwhile, JTC revealed that there were around 570 units in uncompleted strata-titled projects available for sale as of 31 March totalling about 146,000 sq m.
Looking ahead, the industrial landlord expects 1.4 million sq m of industrial space to be completed this year, including 236,000 sq m of multiple-user factories.
“As a comparison, the average annual supply and demand of industrial space in the past three years were around 1.7 million and 1.2 million sq m respectively. As new supply starts to taper in the coming years, prices and rentals should stabilise in tandem with occupancy rates,” it added.
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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