The number of strata industrial transactions in Singapore fell 21 percent quarter-on-quarter in Q1 2017, on the back of rising vacancy rates as well as falling rents and prices, revealed an OrangeTee report.
Notably, a total of 165 industrial strata sales were registered in Q1 2017, or the lowest quarterly transaction for the last eight years, showed caveats data. Of these, only 14 were new sales – a level not seen since Q4 2005.
“Rising vacancy rates and falling prices and rents continue to evoke a cautious stance among buyers. As such, some developers have decided to lease out their unsold units in a bid to wait out the current period of weak demand,” said the report.
Notably, industrial prices fell 2.2 percent quarter-on-quarter in Q1 2017.
Multiple-user factory prices dropped 1.8 percent while single-user factory prices declined by three percent, bringing them at 11.8 percent and 17.7 percent below their peak levels in Q2 2014 and Q1 2015, respectively.
Overall industrial rents also dropped 0.9 percent quarter-on-quarter.
“Industrial rents are expected to remain under pressure with around 2.4 million sq m of industrial space expected to come online in 2017, which is higher than 2016’s supply of 2.1 million sq m,” said OrangeTee.
Incoming supply, however, is expected to taper from 2018 onwards, with supply falling by 1.1 million and 0.6 million sq m by 2018 and 2019, respectively.
“Assuming Singapore’s economy continues to improve at this current pace, we could see industrial rents start stabilising towards the end of 2018,” added OrangeTee.
This article was edited by Denise Djong.