Average commercial rents island-wide could street to redemption 6-8 % year on year inside the fourth one fourth of 2016, as industrialists continue to consider bold loan consolidation and moving steps to manage challenging organization conditions. Leases have gone down 4. some per cent cumulatively for the first 50 % of this year, regarding to public data via JTC. Leasing statistics just for the third one fourth are not unveiled yet.
Nevertheless according into a property agency, overall commercial rents fell 1 . 2 per cent quarter on quarter (q-o-q) in Q3 to S$2. 08 per square foot per month (psf pm). The decline was broad-based, across most locations.
The report said some industrialists are relocating to lower-rent locations even if the locations are not as attractive. Some used car traders and parallel car importers are also moving to smaller showroom premises amid weaker car sales.
With softened demand and strong pipeline supply of industrial space in the market concurrently, the double- whammy situation is expected to weigh upon industrial rental prices further. This can be in exemption to freehold industrial gadgets where require and rental prices are likely to stay resilient offered the limited supply.
In the transaction side, the agency also needs average rates for leasehold factory and warehouse gadgets to street to redemption 4. your five per cent to six. 5 % year on year (y-o-y), and those for the purpose of freehold plant and storage place units to fall zero. 5 % to two per cent y-o-y in Q4.
The moving of greater oil and gas products and services companies can be expected to effects smaller promoting companies inside the Pioneer-Tuas bunch especially. More compact companies giving supporting products and services in the gas and oil industry and ecosystem are required to face better headwinds inside the coming 2 to 3 quarters, seeing that oil rates continue to street to redemption and with large international oil and gas products and services companies McDermott and Subsea 7 transferring most of their very own operations away of Singapore to Kuala Lumpur, Malaysia. The companies got made the decisions recording, with McDermott citing closeness to local clients seeing that the inspiration for the move, although Subsea several is proposed to have chosen so for the purpose of cost factors.
A subsequent wave of consolidation can be expected amongst these small enterprises, and this is going to lead to even more weakness inside the demand for space in the Pioneer-Tuas industrial bunch. In particular, openings of places of 1, five-hundred sq ft or less, which meet the needs of such smaller businesses, is expected to rise.
The Pioneer-Tuas cluster in fact suffered the largest rental decline of 9. 6 per cent q-o-q in Q3 among all the regions, mainly due to the under-performing oil and gas industry, related offshore and marine services, and general manufacturing that dragged down the activities of related and supporting trades in the Business-2 cluster for heavier industrial use.
Rents in certain clusters that are considered more established industrial hubs were more resilient. These include the Kaki Bukit, Ubi, Paya Lebar, Eunos cluster and Kallang, Geylang, Bendemeer cluster, which respectively improved by 2 . 6 per cent and 1 . 3 per cent q-o-q.
These venues also have amenities such as food centres, and are supported by improved accessibility thanks to the near completion of stage-three Downtown Collection by 2017 which covers stations such as Bendemeer, Ubi and Kaki Bukit.
As for business park rents, they also moderated downwards by 4. 1 per cent q-o-q to S$4. 22 psf pm in Q3, despite earlier talk that this hi-tech space will be better able to preserve its rental values. Nonetheless, business park space equipped with flexible layout, ready amenities, good connectivity, and clustering effect remain well-occupied, the report said.
On the transaction side, average price of upper-floor strata-titled factory units rose in Q3 despite the number of transactions falling. In the first two months of Q3, there were only such 84 transaction caveats, making up just over a third of the 222 caveats lodged in the whole of Q2.
For the purpose of warehouses, normal prices of upper-floor strata-titled units fell into tandem with softening require. There were just five tricks lodged inside the first 8 weeks of Q3 – regarding 30 % of the seventeen caveats stuck in the whole of the preceding one fourth. But freehold assets, especially in the central region, continued to be highly preferred, evident in the quarter-on-quarter improvement with their transaction rates over the past two quarters.