Chart of the Day: Industrial property prices down 0.2% in H1

Multiple-user factories in areas with heavy industries led the decline.

This chart from Colliers, citing data from JTC, shows that the price index of overall industrial dipped 0.2% in the first six months of the year from H2 2018, amidst sharp declines in the prices of multiple-user factories in areas zoned for heavy industries.

The price index of multiple-user factories hit 79.3, the lowest compared factories aged more than 30 years (83.2) and those with less than 30 years of age (87.1). Factories that are more than 60 years old have the highest price index at 98.6.

Median prices psf for strata-titled units transacted in the same period were $423 for factories and $506 warehouses, down 12.3% from $577 in H2 2018. Furthermore, Colliers International’s Asia Cap Rate Report stated that net yields for industrial properties with short leaseholds of 30 years remained unchanged HoH and YoY at 5.5–6.5% in H1 2019.

“We expect capital values for prime industrial properties with freehold or longer land tenure to be firm in the near future due to their scarcity,” Colliers said in the report. “We note declining interest for 20-year leasehold land in the government land sales as industrialists hold off capital expenditure and expansion plans.”

In addition, business park monthly rents increased 0.5% HoH and 2.1% YoY to $4.33 psf in H1 2019 amidst tight supply.

Monthly rents for high-spec industrial buildings located outside of science parks and business parks were up 1% HoH and YoY to $2.93 psf. Meanwhile, average gross monthly rents of warehouse-logistics properties slipped 0.8% HoH and YoY to $1.24 psf over the same period.

“Going forward, new business park properties and high-spec spaces should continue to enjoy favorable rental growth due to their premium quality and limited stock, whilst older factory space may see flat to declining rents. As such, we expect the rental gap of business park / high-specs spaces and the general factory/warehouse space to widen towards the end of 2019,” Colliers continued.