Leasing market 'lacklustre': Colliers International

The gross monthly rents for factories in the central area inched up a mere 1.3% to average S$1.52 per sq ft per month.

Colliers International said:

Cautious expansion plans of industrialists on the back of the further moderation of Singapore’s economic growth to 2.6% YoY in the October 2011 to March 2012 period from the 3.6% YoY growth recorded in the preceding six-month period led to a lacklustre leasing market.

Coupled with oncoming supply pressures, the gross monthly rents for factories in the central area inched up a mere 1.3% in the review period to average S$1.52 per sq ft per month by the end of March 2012, while the average gross monthly rents for warehouse space in the eastern part of the island stayed flat at S$1.44 per sq ft during the same period.

In contrast, industrial investment and land sales activities remained robust, driven by institutional investors, especially REITs, as well as end-users who were looking to secure their own landed premises.

Significant REIT purchases in the review period include Cambridge Industrial Trust’s buy of a factory located on 16 Tai Seng Street for S$59.25 million as well as a warehouse at 3C Toh Guan Road East for S$35.5 million; and Cache Logistics Trust’s purchase of Pan Asia Logistics Centre on 21 Changi North Way for S$35.18 million.

These supported the continued uptrend in land and capital values albeit at a slower pace of between 5.1% and 13.5% during the current review period, down from 10.0% to 16.0% in the previous review period.