Industrial space prices down 0.7% in Q1: JTC

The COVID situation could affect the completion of 1.9 million annual supply of industrial space.

The prices of industrial space fell by 0.7% YoY to 89.3 in Q1, according to JTC’s latest quarterly industrial market report. On a quarterly basis, prices fell by 0.4% QoQ from 89.7 in Q4 2019.

Prices of multiple-user factories contributed to the decline, falling by 1.1% YoY to 92.6 in Q1 from 93.2 in 2019. This was offset by the 0.1% YoY rise in prices of single-user factories. Compared to the previous quarter, prices of multiple-user factories and single-user factories slipped 0.6% QoQ and 0.1% QoQ, respectively.

Meanwhile, rents in all industrial space remained unchanged during the quarter compared to Q1 2019, but slipped 0.1% QoQ from prices recorded in Q4 2019.

Multiple-user factory rents dropped 0.4% YoY over the same period, whilst warehouse rents dipped 0.1% YoY. In contrast, rents of single-user factories and business parks climbed 0.9% YoY and 0.4% YoY, respectively.

Occupancy rate in all industrial spaces fell by 0.1% YoY in Q1, although it remained unchanged from Q4 2019’s occupancy.

The slight dip in prices and rents have yet to reflect current-ground sentiments, as Q1 statistics cover only from January to March 2020 or before the circuit-breaker measures implemented this April, noted JTC.

Further, many transactions counted during the period were pre-committed before COVID-19.

The trend is in line with past economic downturn events, such as the 2008 Global Financial Crisis, where impact on industrial prices and rentals only started to show in the following quarter after the event began, according to JTC.

“With the rapidly-evolving COVID-19 situation, there would be downward pressures on prices and rentals in the coming quarters,” the report stated.

Project completions are also expected to be delayed due to disruptions in construction. This could affect around 4.9 million sqm of industrial space expected to be completed between Q2 2020 and end-2023, based on approved plans by end-March 2020.

The average annual supply and demand of industrial space in the past three years were approximately 900,000-1 million sqm, noted JTC.