Private industrial property sales hit record high in 2013

Thanks to sale-and-leaseback deals.

According to Jones Lang LaSalle's Asia Pacific Property Digest, private industrial property sales totalled
SGD 598 million in 4Q13 and reached a record high in 2013 (+85.4% y-o-y). This was partly attributable to numerous sale-and-leaseback transactions which provided attractive net yields for acquisition managers.

Headlining the quarter’s investment market was the sale of Technopark @ Chai Chee to Viva Industrial Trust for SGD 193 million.

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12-Month Outlook

On the back of a larger supply pipeline as compared to 2013, it could take longer for space to be absorbed as companies hold back on expansion plans following the government’s emphasis on productivity through the use of technology alongside a tightening of foreign labour policies.

However, there are positives as most upcoming projects have already secured major anchor tenants. For instance, Galaxis has already attracted the likes of Canon and Oracle. Rents are expected to grow in line with inflation, but the large supply pipeline could add downside pressure. Capital values are likely to remain relatively stable with upside potential in the short term.