The capital values, rents and land values of conventional industrial space in Singapore could increase 10 percent in the next 12 months, as institutional investors return and the economy improves, said Colliers International.
The property consultancy firm found that the market for warehouses and factories has already recovered in the six months from October 2009 to March 2010.
During the period, the average gross rent for single-user factories in central Singapore rose 3.8 percent to $1.35 psf per month. Capital values for such property also increased 3.6 percent to $145 psf.
Separately, warehouses in eastern Singapore saw their average gross rent rise 6.7 percent to $1.28 psf per month. Capital values also climbed 6.2 percent to $138 psf.
However, rents for high-specification industrial projects continued to decline, although at a slower pace. The average gross rent for this type of space fell 5.1 percent to $2.78 psf over the six-month period.
On a brighter note, occupancy rates for high-spec space has stabilized. Colliers attributed this to firmer office rents in a recovering commercial market, which has deterred tenants from moving back to offices.
Colliers anticipates the overall industrial property market in the country to do better, as the economy continues to pick up. “The recovery in the exports and manufacturing sector should support an expansion in demand from manufacturers,” said Ms. Tay Huey Ying, research and advisory director of Colliers.
“Coupled with the return of institutional funds to the industrial market, rents, land and capital values of single-user factories and warehouses are expected to increase up to 10 percent in the next 12 months,” she added.
Ms. Tay also expects rents of high-spec space to bottom out in 2010.
Aside from Singapore, Colliers noted that most industrial property markets in Asia-Pacific cities have already stabilized.