Rental growth of hi-tech industrial space gathers momentum: DTZ

Rental growth for hi-tech industrial space in Singapore, which includes business parks, rose at a faster pace in the second quarter than in the first quarter of this year, according to DTZ Research.

The real estate services firm said the average monthly gross rent for private high-tech space increased 4.5 per cent quarter-on-quarter to S$3.45 per square foot (psf) per month in the April-June quarter, after rising 3.1 per cent in the previous quarter.

DTZ executive director for business space, Cheng Siow Ying, said: “As office rents have increased at a faster pace, some office tenants who qualify to occupy industrial space due to the nature of their business operations are choosing to move over to business parks and high-tech industrial buildings.”

The average gross rent for first-storey conventional industrial space rose 2.4 per cent on-quarter to S$2.15 psf per month in the second quarter following a similar 2.4 per cent increase in the first quarter.

The average rent for upper-storey conventional industrial space grew 2.9 per cent on-quarter to S$1.75 psf per month, also similar to the increase of 3.0 per cent in the previous quarter.

Meanwhile, the pace of increase in capital values for industrial properties grew in the quarter as more investors shift their focus away from the residential and office sectors where prices and potential supply are higher, said DTZ.

The average capital value for freehold upper-storey factory space rose 5.6 per cent on-quarter to S$395 psf following an increase of 1.1 per cent in the first quarter. This was almost 7 per cent higher than the average capital value recorded during the previous peak in 2008.

Head of DTZ South East Asia Research, Chua Chor Hoon, said: “There was an increase in transactions of strata industrial units since Q2 2010, above 400 units per quarter.

“4,151 strata transactions were recorded so far in Q2 2011, slightly lower than the 429 units recorded in Q1 2011. As lodging of caveats is voluntary and is delayed, we expect the figure in Q2 2011 to rise further.”

Source : Channel NewsAsia – 11 Jul 2011

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