SINGAPORE - Industrial landlord JTC said occupancy rates for factory space in Singapore will continue to fall this year in the face of looming supply.
This, coupled with the weaker economic outlook, could further depress rents and prices.
JTC said that given the large supply pipeline, there will be ample space over the coming years for industrialists to expand their operations.
The fourth quarter of 2015 saw prices of industrial space fall by 1.5 per cent and rents by 1.1 per cent over the third quarter, said JTC in its quarterly market report released on Thursday (Jan 29).
The volume of industrial properties sold in the fourth quarter were also half the level seen a year ago, and more than 85 per cent lower than three years ago, based on the number of caveats lodged.
Over the whole of 2015, prices and rentals fell by 1.7 per cent and 2.1 per cent respectively compared to 2014. That year, rentals also fell 2.1 per cent but prices rose 3.5 per cent.
The overall occupancy rate of industrial properties decreased to 90.6 per cent in the fourth quarter from 90.8 per cent in the third quarter. The occupancy rate for multiple-user factory space also fell by 0.1 percentage point to 87.2 per cent after an increase of about 105,000 sq m of multiple-user factory space in the quarter.
JTC said occupancy rates will feel further downward pressure because of looming supply.
This year, an estimated 2.9 million sq m of industrial space, which includes 616,000 sq m of multiple-user factory space, will come on stream - sharply higher than the average annual supply and demand of around 1.7 million sq m and 1.2 million sq m during the past three years.
In 2017, 1.6 million sq m of industrial space is estimated to come on stream, inclusive of 450,000 sq m of multiple-user factory space.
For industrialists looking to own production space, there were around 2,100 units, totalling 606,000 sq m, in uncompleted strata-titled developments still available for sale as at end of the fourth quarter.