Values of conventional industrial spaces predicted to rise 3%

But it's still slower than 2012's pace.

According to Colliers International, industrial rents are projected to stay relatively stable for the rest of 2013. Although landlords of newer and upgraded buildings could seek higher rents, any increase in rents will still be limited by tenants’ cost-conscious stance and supply pressures. 

Ms Chia Siew Chuin, Director of Research & Advisory at Colliers International, said "Consequently, for the rest of 2013, industrial rents are forecast to remain flat for prime conventional industrial premises, with marginal upside seen for high-specs and business park space.” 

The Government’s industrial land sales programme for 2H 2013, which continues to release for sale industrial sites with a maximum tenure of 30 years, could provide some level of support to demand for freehold or leasehold properties with longer-than-30-year land tenure. 

Ms Chia comments, “The average capital values of prime freehold warehouse and factory space are forecast to increase at a moderate pace of about 0.5 per cent per quarter. This will bring the full year price forecast to up to 3 per cent – significantly slower than the growth range of 10-22 per cent in 2012 for these two types of conventional industrial space.” 

Meanwhile, transaction activity in the strata-titled industrial property market in 2H 2013 is likely to stay subdued – due to the effects of the SSD, the fragile economic outlook, as well as the potential interest rate increase as a result of the cut-back in monetary stimulus by the US Federal Reserve.