Industrial land prices, rentals fall in Q3: JTC

Industrial land prices and rentals have continued to moderate in the third quarter of this year, according to the latest quarterly report on industrial properties by JTC.

Industrial land prices in the third quarter fell 0.9 per cent from the previous quarter, following a 0.7 per cent rise in the previous quarter. However, on a year-on-year basis, prices edged up 0.2 per cent.

In the multi-user factory space segment, prices fell 1.8 percent on-quarter – reversing the 2.5 per cent rise recorded in the previous quarter.

Rentals for overall industrial space also fell in the third quarter, easing 1.8 per cent from the second quarter. On a year-on-year basis, the rental indices for industrial space fell by 1.3 per cent and by 2.4 per cent for multiple-user factory space.

JTC said this is the first on-year decline in rentals since early 2010, and is in contrast to the average increase of about 8 per cent per year for the last four years.

INDUSTRIAL OCCUPANCY RATES

Occupancy rate on the overall industrial property market edged up slightly by 0.2 percentage points on-quarter. The increased occupancy rate was driven by the warehouse segment, mainly due to the take up of a few new single-user warehouses.

For multiple-user factory space, the occupancy rate fell by 0.5 percentage points in the quarter – hitting its lowest level since late 2007.

On a year-on-year basis, the occupancy rate of the overall industrial property market fell by 1.8 percentage points, and declined 3.3 percentage points for multiple-user factory space.

Tender prices in the Industrial Government Land Sales (IGLS) sites targeting multiple-user developments have also declined, JTC said.

It pointed out that the highest tender bids received for two large Tuas sites in late August and September were about 50 per cent below the highest bid for another Tuas site, whose tender closed in August last year.

It added that “a similar trend was also observed for large IGLS sites in the north region and the number of bidders per site also fell in recent tenders”.

Looking ahead, JTC said about 1.2 million sqm of industrial space is expected to come on-stream in the fourth quarter, bringing the supply of industrial space for the full year to 3.1 million sqm.

Another 2.6 million sqm of industrial space is expected to be released in 2015 and 1.9 million sqm in 2016. This is significantly higher than the average annual supply of 1.4 million sqm and 900,000 sqm in demand for the past three years, JTC said, adding that this will exert further downward pressure on occupancy rates.

Source : Channel NewsAsia – 23 Oct 2014

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