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The industrial leasing market also grew by 3.1 percent.
Industrial property sales grew 27.6 percent year-on-year, with 286 warehouse and factory properties moved for over $1.3 billion in the first quarter of 2019, reported Singapore Business Review citing Savills.
Major resales of land parcels that pushed investment value included single-user factories in Banyan Drive and Tuas South Avenue 14, which were sold for $227.5 million and $585 million, respectively.
“This could imply that the industrial sales market was dominated by owner-occupiers instead of investors,” said the Savills report.
It noted that the positive sales momentum for multiple-user and warehouse and factory space in Q4 2018 did not continue in 2019 as it fell to almost the same sales volume from a year ago.
Prices for 30-year leasehold industrial properties decreased from an annual average of 3.6 percent year-on-year in 2018 to 2.2 percent year-on-year in Q1 2019, while 60-year leasehold industrial units saw prices increase 0.2 percent to $443 per square foot (psf).
The leasing market saw transaction volumes for factory and warehouse space grow 3.1 percent year-on-year to 2,417 deals.
“The increase was led mainly by higher leasing demand for single-user factory space due to the segment’s declining rents. The buoyant leasing market was also attributed to the prolonged weakness of the economy as well as the manufacturing sector, which drove industrialists to capitalise on low rents rather than spending capital on purchasing space,” explained Savills.
Given the abundant supply of warehouse and factory space in the market, rental indices stretched the year-on-year decline in Q1 2019, although at a slower pace compared to the period of early 2018.
The average monthly rent for warehouse and factory space remained at $1.13 psf in Q1 2019.
“As business sentiments and conditions are generally not too sanguine, we believe that rents for general factory and warehouse space have fallen to such a level that any further decline would not generate much cost savings to help turn things around for tenants. For tenants already in Singapore, the immediate challenges will be manpower-related and/or whether their goods and services remain in demand,” said Savills.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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