Prices and rentals of industrial space kept moderating in tandem with occupancy rates in the third quarter after a rise in supply of industrial land and space by the Government in recent years.
Tender prices for industrial government land sale sites targeting multiple-user developments have also declined, said state industrial landlord JTC yesterday.
Indicies for industrial space and multiple-user rental fell by 1.8 per cent and 2.2 per cent respectively, quarter on quarter.
Year on year, those two indices declined by 1.3 per cent and 2.3 per cent respectively.
This is the first year-on-year drop in rentals since early 2010, in contrast to the average increase of about 8 per cent a year over the past four years, said JTC.
Prices of industrial space also kept stabilising, with the industrial space and multiple-user factory space price indices falling by 0.9 per cent and 1.8 per cent respectively, quarter on quarter.
These falls reverse their respective gains of 0.7 per cent and 2.5 per cent in the previous quarter.
Colliers International director of research and advisory Chia Siew Chuin said the fall in multiple-user factory prices is not surprising, given the subdued state of strata-titled industrial property sales amid a price standoff between buyers and sellers.
Year on year, the industrial space and multiple-user factory space price indices rose by 0.2 per cent and 3.4 per cent respectively, significantly slower than their average rises of about 16 per cent per year over the past four years.
After a 0.9 percentage point decline in the second quarter, the occupancy rate of the overall industrial property market edged up by 0.2 percentage point quarter on quarter to 90.9 per cent in the third quarter.
This was on the back of a 1 per cent rise in demand, outstripping a 0.8 per cent increase in supply.
The better 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 point to 86.8 per cent, the lowest level since late 2007, as a 1.5 per cent increase in supply outstripped the 1 per cent increase in demand.
Year on year, the occupancy rate of the overall industrial property market slid 1.8 percentage points to 90.9 per cent.
For multiple-user factories, the occupancy rate fell by 3.3 percentage points to 86.8 per cent.
Looking ahead, about 1.2 million sq m of industrial space, including 167,000 sq m of multiple- user factory space, is set to come onstream this quarter, bringing the full year supply of industrial space to 3.1 million sq m.
A further 2.6 million sq m and 1.9 million sq m of industrial space is tipped to come onstream in 2015 and 2016 respectively.
This is significantly higher than the average annual supply and demand of about 1.4 million sq m and 900,000 sq m respectively in the past three years, and is likely to exert further downward pressure on occupancy rates, JTC noted.
The Government will keep monitoring the industrial property market closely to ensure that the diverse needs of industrialists are met, it added.
“Appropriate measures will also be introduced where necessary to promote a stable and sustainable industrial property market.
“JTC will also continue to develop more specialised and innovative facilities with productivity- enabling features such as shared facilities and services, to support the growth of key industry clusters and catalyse new ones in the coming years.”
Ms Chia reckons sentiment is expected to remain mixed in the final quarter, given the uncertainties surrounding the global economic recovery.