Q3 industrial investment sales value crossed $1b mark but growth is unsustainable

Excluding MapleTree Business City, sales value took a 60.8% nosedive.

The total industrial investment sales more than tripled QOQ to hit a high of SGD1.36b in Q3 2016. Colliers International noted that this was the first quarter that the total value was above SGD1b, since Q4 2014‘s quantum of SGD1.41b.

The first three quarters of 2016 amounted to SGD1.95b, 18.1% above the total transaction value during the same period last year.

Mapletree Commercial Trust‘s (MCT‘s) acquisition of the Mapletree Business City (Phase 1) (MBC) at a consideration price of SGD1.78b (or average price of SGD1,042 sq ft on NLA was the largest investment sales transaction for Q3 2016.

MBC comprises three blocks of business park blocks and an office tower. The business park component was valued at SGD1.208b (or SGD938 psf on NLA).

This amount attributed to 88.7% of the total industrial investment sales for Q3 2016.

If MBC is excluded, Colliers International estimates that private industrial investment sales dipped by 60.8% QOQ to SGD147.8m in Q3 2016, comprising predominantly transactions of landed industrial facilities for end-users.

According to Colliers International‘s research, sales of such properties with value of SGD5m and above, fell by 52.0% QOQ to SGD136.8m in Q3 2016.

"This could be due to the cautious future economic and business outlook undertaken by the industrialists, resulting in an extended decision time-frame. Hence, we anticipate a slowdown in sale activities for such industrial facilities in Q4 2016, as industrialists continue to be watchful of the business sentiments," it said.

Despite the proposed acquisition of a 90% stake in Keppel DC Singapore 3 (data centre) by Keppel REIT in Q4 2016 for SGD202.5 million, Colliers International expects total investment sales value for the industrial sector to decline in Q4 2016 QOQ, due to the likely absence of transaction deals as large as MBC in Q4 2016.