Singapore cooling: SSD unlikely to affect legitimate industrialists

by Cheryl Tay

In an effort to curb speculation and control occupancy costs, the government has introduced a first ever Seller's Stamp Duty (SSD) for Industrial Property Sales.

A 15 percent SSD will be imposed on industrial properties sold within the first year of purchase, 10 percent within the second year and five percent within the third year, said Knight Frank (KF) in a report.

Notably, prices and rentals of industrial properties have been increasing since 2009, with the residential segment's Additional Buyers' Stamp Duty (ABSD) diverting investments towards the industrial sector.

This resulted in a 26.7 percent hike for all industrial prices in Q3 2012, following a 22.3 percent rise during the same period in 2011. At the same time, rentals also climbed, albeit at a slower pace. The rental index rose six percent in the first nine months of 2012 and 15 percent previously.

The SSD is expected to stamp out speculation in the industrial sector in the coming two quarters. It could also potentially prevent a situation where industrialists could suffer from a double whammy of poor production sales and higher occupancy costs, given the lacklustre global economic outlook.

Notably, genuine industrialists will unlikely be affected by the SSD as they typically hold their properties for a long period. For industrialists planning to expand, they could benefit from this cooling measure, as prices of industrial spaces are expected to fall due to the SSD.

Moving forward, industrial rents are likely to soften as industrialists and end-users resist high rentals. Prices growth of new strata factories are also expected to moderate in the next few quarters, likely rising between five and 10 percent for the entire year.Cheryl Tay, Editor of CommericalGuru, wrote this story. To contact her about this or other stories, email cheryltay@allproperty.com.sg Related Stories:Singapore cooling: Commercial property offers some opportunities Singapore cooling: What would you do? A-REIT posts 4% hike in DPU

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