Prices of 30-year leasehold industrial units surge 43%

This results to $298 per sq ft--narrowing the price gap between 30-year and 60-year properties.

According to Knight Frank, prices of multi-user factory and warehouse spaces have increased further in 2Q 2012, reflecting strong demand as more investors diverted their interest to this sector in search for higher yields. Despite the lingering macroeconomic uncertainties, transacted prices for new and resale strata industrial projects have continued to climb and stayed resilient for the first half of 2012.

Here's more from Knight Frank:

Amidst rising business costs faced by industrialists as industrial land prices and rentals escalated, the Ministry of Trade and Industry (MTI) has announced on 12 June 2012 that the maximum tenure for industrial sites released under the 2H 2012 Government Land Sales Programme will be halved to 30 years from the current 60 years.

Knight Frank has analyzed sales transactions of strata industrial units in the secondary market for the past 4 quarters. The average price of 30-year leasehold industrial properties has surged by 43% quarter-on-quarter in 2Q 2012 to hit $298 per sq ft, whilst the average price of 60-year leasehold industrial properties has remained relatively unchanged at $398 per sq ft. Consequently, the price gap between 30-year and 60-year leasehold industrial properties has narrowed considerably in 2Q 2012.

Resale transactions for 30-year leasehold units are mainly located in Sembawang and Bukit Merah Planning Areas. Conversely, the average price for 99-year leasehold strata units has dipped to $432 per sq ft; whereas the average price for freehold units was up by 17 per cent within 3 months, crossing the $600 per sq ft mark in 2Q 2012. A majority of 99-year leasehold transactions are located in the Bukit Merah and Clementi Planning Areas. For freehold transactions, they are mainly in Geylang, Toa Payoh and Queenstown Planning Areas. The diverging price trend between 60 year / 99-year leasehold and freehold strata units reflects growing investment interest for freehold industrial properties.

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