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Prices of leasehold industrial properties in Singapore with terms of 30 and 60 years slumped to their lowest levels in five years during Q1 2018, reported Singapore Business Review.
According to data from Savills Singapore, their respective prices fell 1.5 percent to $344 psf and dipped 0.6 percent to $442 psf on a quarterly basis.
Over the past three years, such properties posted a compounded annual growth rate (CAGR) in prices of -3.0 percent and -1.5 percent.
Consequently, total sales of industrial space dipped below their three-year averages despite increasing 19.8 percent year-on-year to 2,421 transactions. Statistics from the Urban Redevelopment Authority also reveal that overall sales value reached $559.7 million.
On the other hand, freehold properties saw a CAGR gain of 1.3 percent in prices over the three-year period. In fact, only freehold warehouses and upper-storey factory premises posted an improvement in Q1 2018, rising 1.4 percent quarter-on-quarter to $684 psf.
Meanwhile, there were 2,345 rental transactions involving industrial properties in the first quarter. While this is 11.8 percent higher than the three-year quarterly average of 2,097 deals since 2015, Savills did not see a substantial increase in the take-up of industrial premises.
Although the occupancy rate edged up 0.2 percentage points to 89.2 percent, only 205,000 sq ft of factory space were occupied due to the removal of 51,000 sq ft of supply. For the warehouse segment, occupancy levels dipped 0.2 percentage points to 88.9 percent, with 22,000 sq ft of premises left vacant in the quarter.
The situation was exacerbated by the addition of 151,000 sq ft of new warehouse inventory, with about 15.4 million sq ft of industrial space expected to enter the market this year, said Savills Research senior director Alan Cheong.
“This flowed through to rents and was reflected in the third consecutive year of quarterly decline in the rental index of industrial properties,” noted Cheong.
“Despite the improvement in manufacturing performance in recent quarters, the sector is unlikely to drive up rents for factory and warehouse space because the government is placing more emphasis on diversifying into new value-added and productive-growth markets,” he 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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