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Industrial property prices, rents continue to fall in Q1: JTC

SINGAPORE — Prices and rentals of industrial space in Singapore continued to fall in tandem with occupancy rates in the first quarter of 2017, state industrial landlord JTC said on Thursday (April 27).

TODAY file photo

TODAY file photo

SINGAPORE — Prices and rentals of industrial space in Singapore continued to fall in tandem with occupancy rates in the first quarter of 2017, state industrial landlord JTC said on Thursday (April 27).

From the previous quarter, the price and rental indices for the overall industrial property market fell by 2.2 per cent and 0.9 per cent, respectively, in the first three months of the year. Compared to a year ago, the price and rental indices fell by 8.9 per cent and 5 per cent, respectively.

The industrial property market is expected to remain soft for the rest of this year, JTC said.

“For the next three quarters of 2017, about 2 million sq metres of industrial space, including 421,000 sq metres of multiple-user factory space, is estimated to come onstream.

“This is higher than the average annual supply and demand of around 1.8 million sq metres and 1.3 million sq metres, respectively, in the past three years. This is likely to exert further downward pressure on occupancy rates, prices and rentals, translating to reduced business costs for industrialists,” it said.

Ms Christine Li, Director of Research at property consultancy Cushman and Wakefield, said: “The fall (in first-quarter rentals) is not surprising because according to the Ministry of Manpower, manufacturing employment remained weak with a reduction of 6,500 workers during the last quarter of 2016.”

The substantial influx of new supply of industrial space over the next three quarters will continue to exert downward pressure on rents despite the greenshoots recovery being observed in the manufacturing sector, particularly in the electronics segment, she added.

Meanwhile, the slow take-up of strata-titled projects could be one reason for the continued decline of industrial property prices.

“According to JTC’s latest figure, only 27 per cent of industrial units available for sale in uncompleted strata-titled developments were sold as at end of the first quarter of 2017. Out of the projects that will receive Temporary Occupation Permit in 2017, the take-up rate is 43 per cent. The slow take-up in the strata-titled projects is a reflection of the general weak manufacturing environment due to the slowing global economic growth,” Ms Li said.

JTC said: “For industrialists looking to own production spaces, there were around 1,400 units in uncompleted strata-titled developments that remained available for sale at the end of the first quarter of 2017. With the upcoming supply, there will be ample space options available to industrialists to site or relocate their operations.”

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