Industrial property sales dip 10% to S$1.1b in 3Q11

It seems like the sector has been greatly affected by constant threats of recession.

The total sales transaction value of industrial properties dipped 10% to S$1.1 billion in Q3 from S$1.2 billion in Q23. Savills observed that strata purchases for investment purposes have pulled back significantly compared with those for owner occupation.

Industrial REITs continued on their acquisition trail, with Sabana Shari’ah Compliant Reit acquiring four properties, the first since its listing in November 2010, with a total value of S$132.3 million. Cache Logistics Trust purchased 22 Loyang Lane for S$13 million, its third acquisition since its April 2010 listing. In addition, JTC awarded eight flatted factory buildings and three amenity centres to Mapletree Industrial Trust for S$400.3 million through a two-stage tender which closed in May this year.

Cautious responses were seen in a recent land tender. A 60-year leasehold site at Woodlands Avenue 12 drew only four bids at its tender, which closed in September, with the highest bid submitted by OKH Development at S$142 per sq ft per plot ratio (psf ppr). Just three months earlier, an adjacent parcel received nine bids with a top bid of S$152 psf ppr, also from OKH Development.

The leasing market performed better than anticipated in Q3, thanks in part to the relocation of some tenants from JTC premises. In 2009, JTC temporarily lifted the 50% subletting cap on its premises to help businesses tide over the economic downturn. As the relief measure will end on 31 December 2011, sublessees need to relocate when their leases expire. Although the industrial sector continued to benefit from the spillover leasing demand from the office sector, this has moderated in Q3 in tandem with the softening of office rents.