Prime industrial property prices to surge by 9% in 2H12

Both prime conventional and high-specs premises will also increase by 0.5%.

According to Colliers International, although investors are expected to remain cautious due to the lingering global economic uncertainties and heightened competition for legitimate tenants arising from recent efforts by the government to stem the illegal use of industrial space, sellers’ price expectations are anticipated to stay high on the back of new benchmark prices attained at recently launched projects.

Here's more from Collier's International:

As of 2Q 2012, ground and upper floor prime freehold conventional warehouse spaces were commanding an average price of $608 and $533 per sq ft, up 4.3% and 5.3% QoQ, respectively.

In light of the above, prices of prime conventional industrial properties are forecast to increase by up to around 9% over the July to December 2012 period, a moderation from the price growth of up to about 17% in the first half of the year. On the leasing front, while lease renewals are expected to dominate market activity in the next two quarters, there could be some new leasing demand from foreign firms relocating or setting up operations in Singapore.

While the above bodes well for the leasing market, tenants’ resistance to any further rise in rents is expected to limit the rate of rent growth for both prime conventional and high-specs/business park premises to up to 0.5% over the last six months of 2012, compared to a growth of up to 2.0% seen in the first half of 2012.