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Industrial land supply up, stabilising rents and prices

THE increase in the supply of industrial land has stabilised rents and prices in some categories while sending occupancy rates down to levels not seen since 2007.

The occupancy rate of the overall industrial property market dipped to 90.7 per cent in the second quarter, according to data from state industrial landlord JTC yesterday.

Occupancy for multiple- user factory space – intended for light industry and most commonly used by small and medium-sized enterprises – is at 87.3 per cent.

JTC attributed this to the increase in supply of land by the Government in recent years.

Ms Chia Siew Chuin, the director of research and advisory at Colliers International, said the buoyant strata-titled industrial sales market from 2010 to 2012, which resulted in more redevelopment projects in the private sector, was another contributing factor.

The dip in occupancy might also have been due to stricter enforcement over who qualifies to use the space as well as the time lag between project completion and physical occupation of the space, said Ms Chia.

Rents stabilised in the first half of the year, in line with lower occupancy, going up just 0.3 per cent. This was much lower than the 4.7 per cent increase in the second half of last year, and the 4.3 per cent hike in the first half of last year.

Industrial rents slipped 0.1 per cent in the three months to June 30 from the first three months of the year but they were still 5 per cent higher than in the same period last year.

This was slower than the average increase of 10.2 per cent per year over the past four years, JTC said.

Prices of industrial space have also settled down. They rose just 0.7 per cent in the second quarter from the first and were 3.9 per cent higher than the second quarter last year.

These rises are also a far cry from the average increase of 18.8 per cent per year over the past four years, JTC said.

The leasing market could continue to see healthy activity over the next six months, said Ms Chia, thanks to Singapore’s attractiveness as a base for regional headquarters and research and development centres for firms looking to grow their footprint in South-east Asia.

Industrial rents are expected to remain stable or ease marginally over the next six months, as industrialists are likely to remain cost-conscious, given the still-uncertain global economic environment, added Ms Chia.

Besides releasing more land, the Government “will also ensure that upcoming industrial developments better serve the needs of industrialists”, JTC said yesterday.

About 1.8 million sq m of industrial space will become available in this half of the year, of which 400,000 sq m will be multiple-user factory space.

– See more at: http://business.asiaone.com/news/industrial-land-supply-stabilising-rents-and-prices#sthash.djZk7iHz.dpuf