Chart of the Day: Here's the heartbreaking drop of leasing volumes of factories and warehouses

It's almost a 5-year low.

The successive drop in Singapore's manufacturing scene has apparently been plaguing the factory and warehouse segment as leasing volumes continued to disappoint.

According to Savills, the second quarter recorded thin sales volumes with only 354 caveats lodged for strata factories and warehouses, 28.2% lower than the previous quarter and 63.3% down YoY. 

Here's more from Savills:

Quarterly growth is also weaker than the 66.4% average QoQ growth for the second quarter in the past five years. We also note that 60-year leasehold units sold more than twice the number of both freehold and 30-year leasehold units.

This implies that there is greater buying confidence in 60-year leasehold units as they are perceived to be more fairly priced.

In the reviewed quarter, prices of Savills basket of upper-storey strata factories and warehouses declined for those on 30-year tenures but increased for the rest.

Prices of 30-year leasehold industrial units were 1.5% lower QoQ at S$369 per sq ft. However, 60-year leasehold and freehold units rose 0.9% and 3.4% respectively to S$481 and S$704 per sq ft.

The current oversupply of 30-year leasehold units, which has had a negative impact on prices, is exacerbated by the government’s intention to release an average of about 5.4 million sq ft of multi-user factory space over the next three years.

The Republic’s industrial leasing scene remains as active as in the previous few quarters. There were a total of 1,426 rental transactions in April and May.

With a month to go, rental volumes for Q2/2014 are likely to surpass Q1’s total of 1,752 deals. The high volumes recorded this quarter reflect the optimism of industrialists towards the manufacturing business in the near future despite Singapore’s rather lacklustre manufacturing growth numbers relative to the greater global economy.

Meanwhile, with manufacturers battling to contain high operation costs and landlords pushing for better rental returns, rents are continuing to stagnate.

Monthly rents of both upperstorey factory and warehouse units remained at S$2.00 per sq ft, while high-tech units were also unchanged at S$3.00 per sq ft per month.