Industrial property prices eased last year after rising for four straight years while rents fell for a second straight year, according to statistics released by JTC yesterday.
Given recent gloomy manufacturing data and a supply glut in the near term, rents should continue moderating this year, experts said.
"Local companies, especially the small and medium enterprises, could be more cost-sensitive and take a wait-and-see attitude on expansion, given the uncertain economic outlook," said Ms Christine Li, director of research at Cushman & Wakefield.
Industrial property prices fell 1.5 per cent in the fourth quarter from the third quarter, taking the full-year fall to 1.7 per cent. Prices rose 3.5 per cent in 2014.
Prices of multiple-user factory spaces in the west region fared the worst, sliding for an eighth straight quarter owing to the large supply there.
Prices for the same facilities in the central region remained fairly unchanged as many are on longer tenures, said SLP International executive director Nicholas Mak.
Rents fell 1.1 per cent in the fourth quarter, taking the full-year fall to 2.1 per cent, the same as 2014.
Rents of multiple-user factories posted their steepest decline since the first quarter of 2010 while rents of the traditionally stronger single-user factory segment fell for a second straight quarter, said Dr Chua Yang Liang, head of research for South-east Asia at JLL.
"(This) emphasises the impact of the weak global demand on the local industrial market."
Vacancy rate islandwide rose 0.2 percentage point from the third quarter to hit 9.4 per cent, the highest in at least three years.
"A 1.2 per cent increase in supply outstripped a 0.9 per cent increase in demand (during the quarter)," JTC said in its market report.
It also noted that a large amount of industrial space will be completed over the next few years.
About 2.9 million sq m of industrial space will be ready this year, with another 1.6 million sq m to be completed next year.
In comparison, average annual supply and demand of industrial space were just around 1.7 million sq m and 1.2 million sq m, respectively, over the past three years.
As global demand remains weak, industrial rents could soften up to 5 per cent this year. "(But) not all is lost as unemployment is still low at under 2 per cent, suggesting the attrition of labour from the manufacturing sector could have been absorbed by other sectors," said Dr Chua.
Given advances in fields including 3D printing, data analytics, robotics and the Internet of Things, more real estate demand is shaping up, he added.