Most experts see industrial property prices to continue rising

It’s all quiet on the industrial property front more than a week after Singapore’s first cooling measure on the sector kicked in.

Most market experts are confident that industrial property prices will hold steady and may even increase by up to 15 per cent this year.

But there’re others who believe the sector is set for a correction.

For the first time, Singapore is imposing a Sellers’ Stamp Duty on industrial property purchases. Properties sold within the first year will be levied 15 per cent; 10 per cent in the second year and 5 per cent in the third year.

The latest cooling measures on industrial properties came about as speculative activity shot up last year.

Industrial property prices have doubled over the last three years, outpacing rent increases.

Last year alone, industrial property prices in the third quarter was almost a third higher than in the beginning of 2012, according to the Urban Redevelopment Authority’s industrial property price index.

Experts said unlike the Additional Buyers’ Stamp duty on residential properties, the Sellers’ Stamp Duty will not apply if a property is sold from the fourth year. There’s also no additional cost immediately after buyers sign on the dotted line.

PropNex’s senior group district directo, David Poh, said: “The government only wants to wipe off speculators but not the investors. Since there is no increase in cost to industrial investments, you will probably see one or two months of digestion period. This year’s increase won’t be as strong as last year’s – 20 over, 30 per cent. But in the range of 10-15 per cent, I think it is about there. The industrial segment is still supported by very strong investment demand.

DWG’s senior research manager, Lee Sze Teck, said: “Property will remain in the positive territory, remaining in the positive territory this year, probably 5 per cent.”

But some experts believe Singapore’s slowing economy could hit industrial property prices.

Savills’ industrial real estate director, Dominic Peters, said: “Prior to these measures, there is already a huge over supply in industrial strata units – in many areas like Woodlands, Kaki Bukit, Ubi, Yishun. So with these measures, definitely it will impact the market. I see a downward trend say 15-20 per cent in 2013, 2014.

New land supply released by the government for industrial use could also dampen industrial property prices and rental.

Last year, cash-rich investors lured by higher returns from industrial property pushed the number of industrial property transactions to a record high of 3,460 – 77 per cent higher than in 2011, according to data from Colliers.

Source : Channel NewsAsia – 22 Jan 2013

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