http://www.businesstimes.com.sg/arch...17-q2-20130626

Published June 26, 2013

Resale strata factory units sold down 17% in Q2

Cooling effect of sellers' stamp duty on industrial property kicks in

By ong chor hao


THE industrial real estate market seems to be losing some momentum in the second quarter, as buyers turn more cautious following the introduction of a sellers' stamp duty (SSD), research by DTZ shows.

The number of resale strata factory units sold fell 17 per cent in Q2 from the first quarter of the year to 266 units, DTZ said yesterday, citing caveats from the Urban Redevelopment Authority (URA).

This followed a 26 per cent fall in such transactions in Q1 to 320 units.

In the meantime, the capital value growth of conventional industrial space continues to slow.

Resale prices of first- and upper-storey space edged up 0.3 per cent and 0.6 per cent respectively in the second quarter of the year.

In the first quarter, the prices grew by 0.5 per cent and 2 per cent respectively.

This brought price growth for first- and upper-storey industrial space for the first half of the year to 0.8 per cent and 2.6 per cent respectively.

This compares with the 7.8 per cent and 6.5 per cent growth in the second half of last year.

Lee Lay Keng, head of Singapore research at DTZ, said that the introduction of the stamp duty on industrial property in January - part of the government's latest property cooling measures - has had a "dampening effect".

"The fall in transaction volume was also due to a mismatch in expectations between buyers and sellers," she said.

"Sellers are holding on to their asking prices while buyers are becoming increasingly cautious due to the SSD and the possibility of an increase in interest rates."

That said, rental rates held firm in the second quarter amid increasing manufacturing activity and as occupancy rates for industrial space remain healthy, at above 90 per cent as at the first quarter of the year, Ms Lee said.

Average gross rents for first- and upper-storey conventional industrial space were unchanged from the previous three-month period, at $2.15 per square foot per month (psf pm) and $1.75 psf pm respectively.

Rents for high-tech industrial space followed the same story, holding at $3.10 psf pm.

In the business park segment, rents also held steady, at $4.70 psf pm, amid sustained interest.

Angela Tan, regional head for occupier services at DTZ, said that demand came from companies in the pharmaceutical, infocomm, media and technology sectors, "which favour the newer, better quality and more self-sufficient environment offered by business parks".

Despite a large supply of about 2.5 million sq ft of business space over the next two years, Ms Tan believes that rents are still likely to go up due to an expected economic recovery in the latter half of the year.

"Moreover, about 60 per cent of this upcoming supply is owner-occupied or has been pre-leased," she added.