It has slipped 3.4% over five days while the overall S-Reit market declined 2.7%
THE industrial segment was the hardest hit in the recent decline of the S-Reit market, slipping 3.4 per cent over five days as the overall Singapore-listed real estate investment trust market fell 2.7 per cent, MayBank Kim Eng said in a report yesterday.
This compares with a 3.2 per cent decrease in healthcare Reits, a 2.8 per cent decline in both office and retail Reits and a 0.4 per cent dip in hospitality Reits.
That industrial property prices have doubled over the past four years and reached record levels since the global financial crisis of 2007-2008 was probably an unintended consequence, said MayBank Kim Eng analyst Ong Kian Lin.
In particular, these industrial properties were strata-titled and had over-extended their allowable use, such as for pseudo-office or residential purposes. Industrial property cooling measures enacted since 2012 also proved to be more muted compared to the residential segment.
"This could be because the Urban Redevelopment Authority, which manages residential land in Singapore, has a more 'socially inclined' agenda, and will thus tend to monitor price appreciation in residential properties more closely," Mr Ong told BT.
"Of course, the fact that five out of nine industrial Reits got listed from 2010-2013 (after the global financial crisis) did not help matters."
Recent cooling measures, including locking in land leases and anchoring tenants for longer periods, could be aimed at preventing massive selling by asset owners and vacating in droves by tenants.
Said Mr Ong: "This, therefore, slows down the ensuing hard-hitting effects on capital values."
But he said that with the doubling of industrial property prices, he will not rule out more forceful measures in 2014 should prices continue to climb.
Source from Business Times