The Straits Times | April 3, 2013
Sector's capital values still rising despite seller's stamp duty: Report
Demand for high-tech industrial space from engineering, pharmaceutical, infocomm, media and technology tenants pushed rents up in the first quarter of this year.
Average rents for high-tech industrial space rose 3.3 per cent quarter-on-quarter to $3.10 psf per month, according to a report by DTZ Research.
In contrast, average gross rents held steady for conventional industrial space in the same period at $2.15 psf per month for first-storey units and $1.75 psf per month for upper-storey units.
The report noted that while rent for business park space was unchanged at $4.35 psf per month, newer business parks nearer the city commanded higher rents of between $5 and $6 psf per month.
DTZ's report also indicated that industrial capital values continued to rise at a slower rate. This was despite the seller's stamp duty (SSD) imposed from Jan12 on industrial land and properties purchased and sold within three years.
The stamp duty caused resale strata units to halve quarter-on-quarter, said the report.
Capital values of first-storey industrial space recorded a modest quarterly increase of 0.5 per cent, while those of upper-storey units rose 2per cent in the same quarter.
DTZ's head of Singapore research Lee Lay Kheng said: "The SSD will temper speculative activity in industrial properties but will have a limited impact on buyers with a longer-term view, such as developers, Reits and owner-occupiers."
Ms Lee added: "The holding period of three years will see investors more inclined to purchase new industrial units and sell them upon completion three years later."
In addition, 16.3 million sq ft of industrial space will be completed this year, compared to the average of 10 million sq ft per year in the last decade.
This accounts for more than 37 per cent of the 43.3 million sq ft meant for industrial space between this year and 2016, said the report.
Therefore, Ms Lee expects yields to compress further as the excess pipeline supply and sluggish manufacturing sector exert downward pressure on industrial rents, while prices continue to hold up.
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Sherry Tang | 9844 4400 | R020241C
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