Industrial units buck trend

Industrial units buck trend

Prices of factory and warehouse space have defied the slowing real estate market to shoot up 7.3 per cent in the first quarter, almost double the pace of gains in the previous three months.
Rents were also up, gaining 1.8 per cent compared with the 0.4 per cent increase in the last quarter of 2011.

Industrial prices are now 35 per cent above the peaks hit in the third quarter of 2008 and are close to 15-year highs.

The fast pace of growth in this once-overlooked sector comes on the back of strong demand from end-users and investors keen on capital gains and high yields.

Industrial prices are also responding to the continuing interest in the sector from investors deterred by a slew of residential cooling measures.

Prices of shoebox industrial units - some as small as 50 sq m to 80 sq m - in particular have set benchmark prices over the past year, say experts.

Recent tightening of development guidelines for industrial sites acquired from government land sales programme which prohibits new developments from being subdivided into strata units within 10 years from the issue of the temporary occupation permit. The rule applies to selected sites near MRT stations and those decided by the Government, helped to fuel industrial demand.

Businesses clearly remain positive about prospects despite the economic uncertainty, given that the net new industrial space leased hit a seven-quarter high of 2.98 million sq ft in the first quarter.

Rents were supported by relatively healthy occupancy rates of 93.5 per cent in the first quarter, according to the Urban Redevelopment Authority yesterday.

Source: The Straits Times – 28 April 2012