Friday, January 18, 2013

Industrial property prices tipped to slide

Analysts say new seller's stamp duty is expected to curb speculation
Straits Times
Jan 18, 2013

Industrial firms planning to expand will benefit most from the property cooling measures imposed last week, according to market experts.

They predict that prices of industrial property will slide in the wake of the new seller's stamp duty, which is expected to curb speculation.

That in turn will help lower business expenses as occupancy costs decrease, alleviating some of the impact from the slowing economy, according to a Knight Frank report yesterday.

Industrial property sold within a year of its purchase will be levied 15 per cent; 10 per cent if sold in the second year and 5 per cent in the third year.

Knight Frank research head Png Poh Soon said speculation is likely to decline over the next two quarters, with price rises for new strata factory projects tapering off as demand softens.

He said: "We are revising our forecast of price appreciations downwards, at 5 to 10 per cent increase for the whole of 2013 from the earlier forecast at 10 to 15 per cent for properties of better tenures, good locations and superior specifications. As for potential industrial property buyers who intended to tap on quick profits, they are likely to adopt a wait-and-see approach."

Separately, Bloomberg reported yesterday that industrial building sales are likely to drop by 10 per cent this year as speculators are driven out of the market.

The report cited CBRE's Jeremy Lake, who said that investment activity will increase for office and retail strata sales instead. Deputy Prime Minister Tharman Shanmugaratnam said last week that evidence of flipping compelled the Government to intervene in the industrial segment.

Analysts welcomed the measures as Singapore needs to retain its cost advantages to remain attractive as a business hub, the Bloomberg report said.

"Measures targeting the industrial sector are appropriate given very vocal concerns by local small and medium scale industries of being increasingly priced out of the market," said Cushman & Wakefield's Priyaranjan Kumar in the report.

"For investors, the message is to purchase prudently and ensure underwriting is not reliant on short-term exits and financing."

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