Industrial property market should brace itself for a muted 4Q13: analyst

No thanks to global and local risks.

According to Colliers International, going forward, sentiment in the industrial property market is expected to be muted in 4Q 2013 – due to the presence of global economic and geo-political risks, uncertainties over the performance of the local manufacturing sector, as well as the effects of recent Government measures.

Ms Chia Siew Chuin, Director of Research & Advisory at Colliers International, says, “Transaction activity in the strata-titled industrial sales market is anticipated to stay subdued in 4Q 2013, as the impact of TDSR filters through the market. With more buyers expected to adopt a wait-and-see approach for a possible price correction, sellers with weaker holding power are likely to lower their prices to move sales.

Here's more from Colliers International:

This will result in a downward pressure on the average capital values of prime freehold conventional industrial space, which is expected to fall by up to five per cent in 4Q 2013. Consequently, the average capital values of prime freehold conventional industrial space for the entire 2013 is forecast to correct by up to 5 per cent.” Ms Chia continues, “On the leasing front, any movement in rents is expected to be minimal, as landlords are likely to hold on to their rental expectations. Moreover, tenants’ continued cost-conscious stance and supply pressures will keep any rental growth in check.

As such, rents of prime conventional industrial space are expected to be relatively stable in 4Q 2013. Meanwhile, rents of business park space are projected to hold steady due to an increase in supply, and if demand remains slow, rents of high-specs space could ease further.”