The Business Times | APRIL 09, 2013
Even as sales volume of strata-titled factories fell sharply in Q1, following the introduction of a seller's stamp duty (SSD) in January, prices remained relatively stable.
According to a quarterly research by Knight Frank, sales volume in Q1 plunged 62.3 per cent quarter-on-quarter to 319 caveats, from the 847 lodged in Q4 last year.
Compared with a year earlier, sales volumes in Q1, typically a sluggish period for sales, are 26.5 per cent lower.
Bearing the brunt of the imposition of the SSD on industrial property is the sale of new uncompleted projects. New sale and sub-sale transactions registered a 71.3 per cent decline to 138, from 480 in the preceding quarter, hit by weaker buying interest after the SSD came into place.
Resale transactions of strata-titled factory units fared slightly better, with a 50.7 per cent fall to 181 from 356 three months ago.
The sharp fall in sales volume was not replicated in property prices, though. Knight Frank said the full impact of the market-cooling measures could kick in in the two subsequent quarters as price trends "generally exhibit a lagged effect to regulations and measures".
Prices of new strata factory units with a 30-year tenure slipped 4.2 per cent from the previous quarter to $345 per square feet (psf), by 4 per cent to $425 psf for units with a 60-year lease, by 1.6 per cent to $876 psf for 99-year leases, and by 3.5 per cent to $956 psf for freehold units.
The effect on industrial prices in the secondary market was mixed. Prices of strata-titled factory units with a 30-year lease fell 10.7 per cent quarter-on-quarter to $219, while that on 60-year leases improved 3.8 per cent to $390. The price of 99-year tenured factory units dipped 0.6 per cent to $551 psf, and that of freehold units climbed 3.3 per cent to $634 psf.
Though islandwide industrial gross rents rose 5 per cent quarter-on-quarter to $2.13 psf, this year's supply of 24.12 million sq ft of new factory spaces is expected to cap the rental increase of industrial spaces, said director and head of industrial at Knight Frank Singapore, Lim Kien Kim.
Demand for industrial properties is unlikely to hit last year's peak levels and will cool as the SSD deters speculative demand and slowing manufacturing activity continues to affect expansion plans of industrial end-users in the near term, he said.
The appreciation of industrial property prices over the past two years should also taper off in the next few quarters following a drop in demand.
"In addition, the bullish buying sentiment could wane with the potentially slower-than-expected take-up of newly completed strata-titled industrial developments amid elevated rents," he added.
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