INDUSTRIAL PROPERTY PRICES TO DROP 10% BY END-2014

Singapore's industrial property market underperformed in 2H 2013 as compared to 1H 2013 in terms of sales volume and transacted prices of new sales, according to Knight Frank.

Singapore's industrial property market underperformed in 2H 2013 as compared to 1H 2013 in terms of sales volume and transacted prices of new sales, according to Knight Frank.

Despite the general slowdown in demand for industrial space, the logistics segment remained resilient with growing demand in export-oriented segments that require storage spaces.

The biomedical and pharmaceutical clusters have lured more players and are expected to remain resilient due to the aging population in Singapore as well as in many other Asia Pacific countries.

Over the next four years, the industrial sector is expected to see a high influx of upcoming supply, with a total industrial gross floor area (both warehouses and factories) of 64.5 million sq ft. Some 34.7 million sq ft are expected to enter the market this year and 23.6 million sq ft next year.

Given the high influx of upcoming supply, along with the Seller's Stamp Duty and Total Debt Servicing Ratio (TDSR), Knight Frank noted that "prices and rentals are currently experiencing downward pressures seen back in 2H 2013."

Knight Frank expects this trend to continue, with industrial property prices moderating by 10 percent while rentals ease by seven to 10 percent year-on-year by end-2014. Sales volumes are expected to remain relatively stable at least for the next two quarters.

Meanwhile, the future of the logistics sector will likely remain positive due to the upcoming Tuas Mega Port.

"The new port is envisaged to handle future generations of container shipments, providing opportunities to introduce more complex technology and accommodate new industrial players to take up space in the Mega Port," it said.

Nikki De Guzman, Junior Journalist at PropertyGuru, wrote this story. To contact her about this and other stories, email nikki@propertyguru.com.sg.

Source: CommercialGuru.com.sg

Date Post: 21/2/2014
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