Wednesday October 31, 2012
S’pore industrial property soars
Investors turn to industrial space after being deterred by curbs for home market
SINGAPORE: Prices of industrial property in the island state shot up in the third quarter and are now nearly 30% ahead of their level at the start of the year, said analysts.
Rents were also up slightly in the three months to Sept 30 which saw the 12th month of gains adding further to the cost pressures on small and medium-sized enterprises.
The gains in capital values were the most dramatic. Prices were up 8.8% in the three months to Sept 30 compared with the previous quarter, said the Urban Redevelopment Authority (URA).
That rise came on the heels of a 7.3% quarter-on-quarter increase in the first three months of the year and an 8.4% increase in the June quarter. The relentless increases drove the URA's overall industrial property price index to a record high.
In the third quarter, the index was 14.7% above the previous peak in the first quarter of 1997, noted Chia Siew Chuin, director of research and advisory at consultancy Colliers International.
Industrial prices at the end of September were 26.7% higher than at the start of the year, and Chia tipped the overall gain for this year to exceed last year's full-year rise of 27.2%.
She said that the “unabated growth” was fuelled by investors turning their attention to industrial properties after being deterred by cooling measures in the residential market.
These measures include the additional buyer's stamp duty introduced in December last year and a cap on home loan tenures announced early this month.
Industrialists were also looking to buy their own premises to gain better control and more certainty over real estate costs in the face of rising rents, allowing sellers and developers to call for higher prices, Chia said.
Factory prices, which jumped 10.1% from the second quarter to the third, were the main driver of the overall rise in capital values. Prices for factories grew 7.2% in the first quarter and 8.3% in the second.
Knight Frank research head Png Poh Soon noted that the supply of factory space plunged 81.6% for the third quarter, in line with weaker manufacturing results in recent months.
Warehouse price increases slowed to 2.3% quarter on quarter in July through September, after expanding 8.6% in April through June.
Overall, industrial rents grew a subdued 1.2% in the third quarter compared with 2.8% in the second. - The Straits Times/Asia News Network