It cites uptick seen in manufacturing, 'moderate' supply of available space
This is because of an uptick expected in manufacturing activity and a "moderate supply" of available space coming onstream this year, it said in a report released yesterday.
The manufacturing sector grew 3.5 per cent year- on-year in Q4 last year, advance estimates from the Ministry of Trade and Industry showed last week, and is expected to gain further with the slight pick up in the global economy expected this year.
The rental market for industrial real estate mostly grew in line with the increased manufacturing activity.
DTZ said that average gross rents for first- and upper-storey conventional industrial space grew 2.3 per cent and 3 per cent year-on-year to $2.20 per square foot (psf) and $1.80 psf per month, respectively.
Rents for hi-tech and business park space stayed flat at $3.10 psf and $4.70 psf per month.
In terms of supply of industrial space, about 19.1 million square feet of private industrial space will be ready this year. This makes up about 40 per cent of an expected pipeline of some 49.1 million sq ft by 2017.
That said, DTZ estimates that 60 per cent of the supply this year will be owner-occupied or already have committed tenants.
"Taking into consideration the expected growth in the manufacturing and externally orientated industries and the moderate supply of available space, rents across all industrial space are projected to move upwards in 2014," the report said.
The rise in rentals in Q4 last year contrasted with the lacklustre sales volume and price performance by industrial property in the second half of last year.
Transaction volumes for strata-titled factories for the whole of last year stood at 2,181 units, just over half the number from a year ago.
Capital values for first- and upper-storey conventional industrial space stayed flat at $627 psf and $470 psf in H2 2013.
DTZ attributed this to the combined impact from a seller's stamp duty introduced last January and a total debt servicing ratio put in place in late June.
The slowdown in industrial activity last year was also contributed to by a restraint in supply, said Lee Lay Keng, head of Singapore research at DTZ.
"The release of smaller sites of (shorter) tenure on the Government Land Sales programme, as well as mandating the minimum size of units, have not only limited the amount of new strata-titled industrial units on the market but also helped confer affordability on industrial land in Singapore, and brought about stability in industrial prices."
Source from Business Times