Industrial property price standoff intensified in Q3 as sales volume plunged 56.7%

Only 420 caveats were lodged.

Industrial property sales volume remained sluggish in the third quarter. According to Savills, only 420 caveats were lodged for strata factories and warehouses, representing a decline of 21.9% QoQ and 56.7% YoY.

In comparison to previous years, the anaemic sales volume shows that there is still a larger price gap between buyers and sellers. Buyers are reluctant to increase their bid prices while the economic restructuring process remains in full swing.

“As the quarter has just ended, the record of caveats has yet to be entirely accounted for and thus we expect the final figure to be close to the 538 caveats recorded in Q2/2014. Nevertheless, we have received more enquiries for food factory units for sale which may indicate that there is still demand for units that are specific to some industries.Prices of Savills basket of 60-year leasehold and freehold upper-storey strata factories and warehouses slipped by 1.0% QoQ to S$476 and S$697 per sq ft respectively,” noted Savills.

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However, prices for 30-year leasehold units have increased 1.9% to S$376 per sq ft in Q3/2014. Recently, there have been a few developers that have adopted a tiered-discount sales strategy.

This shows an increase in the willingness of developers to meet the demands of buyers. However, there will be a limit for the discounts as many of the developments are built on land that was purchased at a high price.