Chart of the Day: 30-year leasehold industrial properties register steepest decline at 12.7%

As they also face continued stiffer competition.

Properties sitting on land with longer tenure are holding up better, as the persistent weakness in strata-titled industrial property transactions continued to exert downward pressure on industrial property prices in the final quarter of 2014. This is due to the limited supply of longer-tenure industrial properties after the Government halved the maximum tenure of industrial sites sold under its land sales programme from 60 to 30 years.

According to a report by Colliers International, based on preliminary caveat records as of January 2015, the average transacted prices of freehold/999-year leasehold multi-user industrial properties registered the smallest quarterly fall of 0.3% in 4Q 2014. This is followed by their 60-year leasehold counterpart where average transacted prices declined by 5.9% quarter-on-quarter (QoQ) and 30-year leasehold multi-user industrial properties which recorded the steepest quarterly price decline of 9.1%.

Compared to 4Q 2013, 30-year leasehold multi-user industrial properties also saw the largest price drop of 12.7%, whereas the average prices of 60-year leasehold and freehold/999-year leasehold multi-user industrial properties eased by 5.4% and 1.7% respectively.

Colliers adds that moreover, the Government’s ramp up of its industrial land sales programme in recent years has resulted in stiffer competition among 30-year leasehold especially after demand slowed down.