Sale of upper-floor factory units at 10-year low

Overall demand for upper-floor strata-titled factory units in Singapore slumped during the first quarter to its lowest level in 10 years, according to the latest research bulletin by Knight Frank released this month.
In Q1 2016, a total of 108 caveats were lodged for such properties, representing a quarterly and annual drop of 13.6 percent and 41.9 percent respectively.
“While resale transactions held fairly steady at 103 caveats, only five new sale caveats were recorded. These new sale caveats were largely contributed from the 30-year leasehold property transactions from Mandai Connection,” said the property consultancy.
For upper-floor strata titled factory units, resale deals slid 12 percent quarter-on-quarter to 103 caveats. Specifically, resale leasehold transactions declined by 27.8 percent to 70 caveats over the same period, while that for freehold surged by 40 percent to 21 caveats.
At the same time, the average price of upper-floor strata-titled factory units dipped by 1.0 percent to S$422 per sq ft on a quarterly basis mainly due to the drop in the average resale price of factory units with lease tenures of 30 years and less.
In contrast, the average price of upper-floor strata-titled warehouse units rose 7.2 percent to S$567 per sq ft due to higher-priced transactions of 60-year leasehold and freehold units located in the Central Region.
Meanwhile, the average rent for upper-floor industrial units in Singapore slid by 1.2 percent. In particular, the Pioneer–Tuas cluster reported the largest quarterly contraction of 8.3 percent to S$1.77 per sq ft, on the back of ample supply and the limited pool of tenants.
Looking ahead, the average rent of industrial properties in the city-state are expected to decline by 5 to 10 percent for the whole of 2016, given the vast amount of supply entering the market this year and the prevailing cautious sentiment of tenants.
Although the average prices of leasehold factory and warehouse space could soften by 5 to 7 percent this year, that for similar freehold properties could likely hold steady in light of tight supply.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg

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