Industrial property resilient despite cooling measures

SINGAPORE — The industrial property market has remained resilient in the first quarter of the year even after the imposition in January of cooling measures on the sector for the first time, data from property consultancy DTZ showed yesterday.

The average gross rent for high-tech industrial space increased by 3.3 per cent in the first quarter from the previous three months to S$3.10 per sq ft per month, after holding steady for two quarters.

Meanwhile, rents for conventional industrial space on the first storey and upper storeys remained unchanged at S$2.15 and S$1.75 per sq ft respectively, DTZ said. The average gross rent for business park space was also unchanged at S$4.35 per sq ft, it added.

Ms Cheng Siow Ying, DTZ’s Executive Director of Business Space, said: “High-tech industrial rents increased in Q1, as demand remained robust and emanated from the engineering, pharmaceutical, infocomm, media and technology sectors, among others.”

“As rents of high-tech industrial space are about 40 to 60 per cent lower than decentralised offices, these provide a good alternative for cost-conscious qualifying occupiers. However, as part of the demand for high-tech space in Q1 was from occupiers displaced from buildings due for redevelopment, we expect high-tech industrial rents to hold steady.”

Capital values of industrial space also rose, but the pace of increase slowed after the curbs unveiled in January, which included seller’s stamp duties of between 5 and 15 per cent for properties sold within three years.

First-storey industrial property prices rose 0.5 per cent from the previous quarter, while upper-storey industrial space increased by 2 per cent. These were slower than the 3.7 and 2.9 per cent growth, respectively, in the previous quarter.

Ms Lee Lay Keng, DTZ’s Head of Singapore Research, said: “The SSD will temper speculative activity in industrial properties but will have limited impact on buyers with a longer-term view, such as developers, REITs and owner-occupiers. We expect yields to compress further, as prices hold up while the sluggish manufacturing sector and pipeline supply exert pressure on industrial rents.”