Economic uncertainties continued to plague industrialists and dampened demand for space in the third quarter, while rising supply also sent industrial property rents and prices falling.
JTC data out yesterday sho-wed that rents for all industrial space and multiple-user factory space fell by 0.8 per cent and 1.1 per cent respectively from the second quarter.
Various segments are treated separately by JTC, including these two. Year on year, the two indices declined by 1.6 per cent and 1.9 per cent respectively. This is in contrast with average annual rent increases of about 3 per cent over the past four years, JTC said.
Industrialists have been grappling with falling exports and fewer orders from Singapore's main trading partners. "The manufacturing sector continues to face headwinds from a relatively stronger Singapore dollar and a weaker Chinese economy," said DTZ regional head of research Lee Nai Jia.
Amid these factors, as well as rising interest rates, companies have been especially cost-conscious this year. "They are taking a longer time to decide whether to buy or rent, and where to move to," said Colliers International executive director of industrial services Tan Boon Leong.
In the third quarter, prices of industrial space and multiple-user factory space fell 0.3 per cent and 0.4 per cent from the second quarter respectively.
Year on year, they were down 0.3 per cent and 0.8 per cent, as opposed to average annual price increases of 8 per cent to 9 per cent over the past four years, JTC said.
The occupancy rate of the overall industrial property market fell by 0.2 percentage point from the second quarter to 90.8 per cent. "A 1 per cent increase in supply outstripped a 0.8 per cent increase in demand," JTC noted.
Compared with a year back, the occupancy rate was 0.1 percentage point lower.
Upcoming completions - to the tune of 3.8 million sq m of industrial space in the fourth quarter and next year - should exert further downward pressure on prices, rents and the occupancy rate.
For the whole of this year, rents could decline by 2 per cent to 2.5 per cent, while prices could fall 1 per cent to 1.9 per cent, said SLP International executive director Nicholas Mak.
The pace of decline could increase next year although the situation should stabilise in 2017 as projected supply falls to a more manageable level, he added.
Transaction volume continued to fall in the third quarter, and was down about 40 per cent from a year ago.