Stabilising The Industrial Sector
According to Colliers International, the stability seen in the industrial property market in the first half of 2013 can be attributed to a culmination of past efforts by the government to rein in industrial property rents and prices, ensuring that the real estate needs of genuine industrialists and producers were met.
Moving forward, the government is expected to keep a close watch on the industrial property market and if necessary, continue to tweak its policies to ensure medium to long-term stability and sustainability.
For the present, the combined effects of recent policy changes (such as the Seller’s Stamp Duty and Total Debt Servicing Ratio), a softening in market sentiment and greater prudence from buyers are expected to keep transaction activity subdued in the strata-titled industrial property market in H2 2013.
Therefore, with the expected divergence in the price gap between buyers and sellers, overall industrial property prices could experience some downward pressure in the second half of 2013. Nonetheless, given that there was already a 3.8 per-cent price escalation in H1 2013, the overall price movement of industrial properties for the whole of 2013, when compared to 2012, should still remain relatively stable.
On the leasing front, although landlords of newer and upgraded buildings could seek higher rents, any increase is expected to be limited by tenants’ cost-conscious stance and supply pressures. Hence, similar to capital values, industrial rents are projected to stay relatively stable in H2 2013.
Overall, the greater stability and predictability in industrial rents and prices can only be good for the Singapore industrial property market, as landlords will have greater assurance of a steady stream of rental income, while occupiers can operate without the anxiety of a runaway property market.