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05-06-13, 18:31
http://www.straitstimes.com/archive/saturday/premium/money/story/elevated-industrial-prices-here-stay-20130601
INVEST
Elevated industrial prices 'here to stay'
Freehold prices for upper-storey units post largest increase of 3.1%
Published on Jun 01, 2013
By Rachel Scully
ELEVATED prices and rents in Singapore's industrial sector are here to stay, property and research consultancy Savills Singapore has said in a new report.
Prices for industrial properties are continuing to rise.
For instance, freehold prices for upper-storey factory and warehouse units posted the largest rise of 3.1 per cent to $669 per sq ft (psf) in the first quarter, from the fourth quarter of last year.
Novelty Bizcentre in Howard Road (see table) recorded the highest number of upper-storey unit transactions during the period at an average price of $925 psf.
Prices rose less sharply for 60-year leaseholds for the same types of properties at 1.3 per cent to $457 psf, and by 1.2 per cent for 30-year leaseholds to $356 psf over the same period.
Midview City in Sin Ming Lane topped the list of 60-year leaseholds with the most number of upper-storey units transacted in the quarter, while Synergy @ KB led the way for 30-year leaseholds.
However, the Savills Research report also indicated that sales slowed down in the first quarter.
The 704 caveats lodged for the purchase of strata factories and warehouses were down a hefty 45 per cent from the preceding quarter and 38 per cent from the 1,141 caveats lodged in the same three-month period last year.
The leasing market, though, performed better with 1,513 sealed deals for factories and warehouses in the first quarter, up 2.2 per cent from the corresponding period last year. The segment was dominated by renewals and relocations of businesses in search of lower rents, said Savills Research.
Occupancy rates at business parks strengthened to 82.8 per cent, up 1.9 percentage points from the preceding quarter.
Monthly rents at business parks were up 2.6 per cent from $3.90 psf to $4 psf quarter on quarter. This was driven by new projects such as Nexus @ one-north, which commanded more than $5 psf per month.
However, monthly rents for upper-storey factory and warehouse units was unchanged at $2 psf, and static at $3 psf for high-tech units, said Savills Research.
These figures have been projected bearing in mind the Government's imposition in January of a seller's stamp duty (SSD) on industrial properties and land bought and sold within three years of purchase.
"Notwithstanding declining yields and increasing supply, an era of elevated prices and rents has come upon us and is here to stay," said Savills Research head Alan Cheong. But it expects sales activity this year for the industrial sector to moderate further with the imposition of the SSD, though this will not be dramatic.
"Barring extreme shocks, we do not expect a sharp pullback as rock-bottom interest rates will continue to draw industrialists to own their premises as a hedge against future rental increases," said Mr Cheong.
Savills Research also said tenant resistance will continue to rein in rental increases as manufacturers strive to stay competitive globally in a challenging business climate.
[email protected]
INVEST
Elevated industrial prices 'here to stay'
Freehold prices for upper-storey units post largest increase of 3.1%
Published on Jun 01, 2013
By Rachel Scully
ELEVATED prices and rents in Singapore's industrial sector are here to stay, property and research consultancy Savills Singapore has said in a new report.
Prices for industrial properties are continuing to rise.
For instance, freehold prices for upper-storey factory and warehouse units posted the largest rise of 3.1 per cent to $669 per sq ft (psf) in the first quarter, from the fourth quarter of last year.
Novelty Bizcentre in Howard Road (see table) recorded the highest number of upper-storey unit transactions during the period at an average price of $925 psf.
Prices rose less sharply for 60-year leaseholds for the same types of properties at 1.3 per cent to $457 psf, and by 1.2 per cent for 30-year leaseholds to $356 psf over the same period.
Midview City in Sin Ming Lane topped the list of 60-year leaseholds with the most number of upper-storey units transacted in the quarter, while Synergy @ KB led the way for 30-year leaseholds.
However, the Savills Research report also indicated that sales slowed down in the first quarter.
The 704 caveats lodged for the purchase of strata factories and warehouses were down a hefty 45 per cent from the preceding quarter and 38 per cent from the 1,141 caveats lodged in the same three-month period last year.
The leasing market, though, performed better with 1,513 sealed deals for factories and warehouses in the first quarter, up 2.2 per cent from the corresponding period last year. The segment was dominated by renewals and relocations of businesses in search of lower rents, said Savills Research.
Occupancy rates at business parks strengthened to 82.8 per cent, up 1.9 percentage points from the preceding quarter.
Monthly rents at business parks were up 2.6 per cent from $3.90 psf to $4 psf quarter on quarter. This was driven by new projects such as Nexus @ one-north, which commanded more than $5 psf per month.
However, monthly rents for upper-storey factory and warehouse units was unchanged at $2 psf, and static at $3 psf for high-tech units, said Savills Research.
These figures have been projected bearing in mind the Government's imposition in January of a seller's stamp duty (SSD) on industrial properties and land bought and sold within three years of purchase.
"Notwithstanding declining yields and increasing supply, an era of elevated prices and rents has come upon us and is here to stay," said Savills Research head Alan Cheong. But it expects sales activity this year for the industrial sector to moderate further with the imposition of the SSD, though this will not be dramatic.
"Barring extreme shocks, we do not expect a sharp pullback as rock-bottom interest rates will continue to draw industrialists to own their premises as a hedge against future rental increases," said Mr Cheong.
Savills Research also said tenant resistance will continue to rein in rental increases as manufacturers strive to stay competitive globally in a challenging business climate.
[email protected]