Industrial property prices and rents fell in the third quarter on the back of a slowing economy.
Among the hardest hit were units on 30- and 60-year leases, which saw prices hitting record lows in the three months to Sept 30, said consultancy Savills Singapore.
"Unless global trade is reinvigorated and the new economy, like e-commerce, expands aggressively here, in the near term, the industrial and warehouse market appears to be running on empty," said Mr Alan Cheong, its research head.
Savills said prices for upper-storey factory and warehouse units on 60-year leases fell about 4.7 per cent from the second to the third quarter to an average of $444.61 per sq ft (psf) - the lowest since 2013.
Values for similar units with 30-year leases fell 2.1 per cent over the same period to $360.53 psf on average. The smallest price fall - down 1.4 per cent to $679.59 psf - was in freehold industrial development, which is not surprising given the limited supply.
Sales of industrial property also slowed as businesses put expansion plans on hold amid the weak economic outlook.
Savills said there were 317 caveats lodged for strata factories and warehouses in the third quarter, down from the 358 deals done in the same period last year.
Industrial rents trended down, and it remained a tenants' market.
"Especially with the plunge in oil prices, oil and gas industry players, who used to be able to afford high rents, are paring their cost and expenditure to the bare bones," the report added.
As a result, the average prime monthly rent for the factory and warehouse sector slipped 6.3 per cent from the second to third quarter to $1.50 psf.
Leasing activity in the industrial market was down by 6.8 per cent quarter on quarter with 2,130 transactions but up on the 2,031 leases signed in the third quarter last year.
Savills expects industrial and warehouse rents to ease by another 5 per cent next year.
Business park rents, however, are projected to climb by 3 to 5 per cent next year, given the dearth in supply in the coming years.
According to JTC Corporation's industrial rental index, the average monthly rent for business parks dipped by 0.2 per cent from the second to third quarter.
Savills said there were 42 leases signed for business park space in the third quarter, down from 45 in the second quarter. It noted that 25 of these leases were at the International Business Park in Jurong East at an average monthly rent of $4.27 psf - up from $4.17 psf in the second quarter.
"The improved rental rates could have been brought about by the sustained healthy demand and the Government's measures in promoting the high-tech sector," the report noted.
