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Singapore’s industrial property market saw occupancy rate increase by 0.2% to 89.4% in the second quarter of 2020 from 89.2% in the previous quarter.
Singapore’s industrial property market saw occupancy rate increase 0.2 percentage points to 89.4% in the second quarter of 2020 from 89.2% in the previous quarter. On a yearly basis, occupancy rates improved 0.1 percentage points.
JTC attributed the hike to the increase in occupancy for warehouse and single-user factory space, “as a result of pre-commitments as well as stockpiling and storage”.
Other segments registered a drop in occupancy rates, with the business parks seeing the biggest decline.
Prices of industrial space, on the other hand, fell 1.1% quarter-on-quarter and 1.7% year-on-year. Rents also declined 0.7% quarter-on-quarter and 0.8% year-on-year.
JTC, however, noted that the drop in prices and rentals may not have “fully captured the economic impact of Covid-19”.
This comes as some transactions have been pre-committed prior to the circuit breaker measures. There was also a relative lack of recent market transactions.
“During the Global Financial Crisis in 2008, prices and rentals only started to show sharper declines two quarters later,” it said.
As at end June, JTC expects about 1.3 million sq n of new industrial space to be completed in 2H 2020. However, only 0.2 million sq m of new industrial space was completed in Q2 2020 “due to the impact of COVID-19 Circuit Breaker measures on the construction sector”.
The figure is a sharp decline from its early projection of 2.1 million sq m for this year.
“We can expect further delays in completion for some industrial building projects, as project owners and contractors adjust to meet BCA’s Safe Restart requirements,” it said.
With this, Knight Frank expects industrial rents and prices to decline by around 5% this year.
Leonard Tay, Head of Research at Knight Frank Singapore, noted that while production in the manufacturing sector may increase over the next 12 to 18 months, the “road to recovery will not be immediate” given the prevailing recessionary pressures on the city-state’s economy.
Tricia Song, Head of Research for Singapore at Colliers International, expects warehouse rents to stabilise this year before recovering from 2021 onwards.
“For business park and high-spec segments, rents are likely to be more resilient than other segments supported by the relative resilience of the Technology, Media and Telecommunications (TMT) sector during this COVID-19 pandemic,” she said.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg