Strata industrial sales recover in Q2 2024

Thanks to the 513 transactions in the second quarter.

On a quarter-on-quarter (QoQ) basis, the sales of strata industrials surged 42.9% in the April to June (Q2 2024) period, according to Savills Research.  

This was equivalent to 513 transactions, reaching its highest level in nearly two years.

This is driven by the sale of a portfolio of 44 units at Cititech by City Developments Ltd and from the sales of Food Ascent, the new ramp-up food factory launched for sale in Q1 2024.

However, industrial properties have recorded a slower price appreciation across all tenure types in Q2. 

Prices for freehold and 60-year leasehold industrial properties increased slightly by 0.5% to $830 per sq ft and 0.7% QoQ to $516 per sq ft respectively. 

Those for 30-year leasehold industrial properties inched up only 0.1% QoQ to $325 per sq ft in Q2.

Meanwhile, the vacancy level for business parks has dropped by 0.3 ppt QoQ to 21.7% in Q2 after six consecutive quarters of increase. 

High-spec industrial spaces, especially those with good amenities and accessibility, posted an average rental increase of 0.6% QoQ to $3.96 per sq ft in Q2.

Sally Tan, senior managing director and head of Client Solutions at Savills Singapore, notes that whilst demand for older business parks has declined, rental growth continues, particularly in newer clusters. She highlighted that high-quality industrial spaces with good amenities and accessibility remain attractive, and asset owners investing in upgrades can expect long-term rental increases.

Likewise, Alan Cheong, executive director of Research & Consultancy at Savills Singapore, observes that the limited supply of multiple-user factories this year could drive rent increases, especially as these smaller units are popular with tenants looking to reduce overheads.  

'Business Park rents may also come under further pressure, with the completion in the newer digital districts, compounding problems especially for the older developments. We are revising our rental forecast for multiple-user factory space from 0% to 2.2% for 2024. For the warehouse and logistics space, we maintain our forecast of 0% to 3% increase for the year,” Cheong added.