Industrial property rents in Singapore were usually secure in 2019, even though the industry was weighed down from oversupply from previous decades, says Christine Li, head of research, Singapore and Southeast Asia, in Cushman & Wakefield (C&W).
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Tricia Song, head of research to Singapore in Colliers International, insists. She states that in comparison to 2018, the general industrial real estate market has revealed”clearer indications of stabilization, with the two rents and vacancy rates remaining relatively steady in the year to September”. Both web demand and internet distribution are predicted to have grown in 2019.
But looking forward, Li states the industrial prognosis for 2020 may be gloomier in contrast to the season. She states international macroeconomic aspects, like slowing economic development in the united states, the EU and China, is very likely to have a negative influence on Singapore’s market in 2020. The subdued global market is expected to medium industrial rents following year, she adds.
Recently completed industrial area doubles in 2019
This year, near 12.5 million sq feet of new industrial area is anticipated to have been finished, which will be more than double the 5.84 million sq feet of new completions in 2018, says Song. New need can be expected to have improved by 50 percent y-o-y to 11.0 million sq feet in 2019, she adds.
For 2020, the biggest new industrial development which is going to be finished is that the Defu Industrial City in Defu Street 1.
Within the one-north industry playground, homegrown gaming hardware firm Razer is expected to start its own purpose-built, 207,743 sq ft headquarters building following season, while ride-hailing giant Catch is supposed to transfer into its 387,000 sq ft purpose-built headquarters construction by 4Q2020.
Two-tier leasing functionality in factory section.
“Looking forward, warehouse rents are expected to become resilient, backed by a tight distribution facility,” says Desmond Sim, head of research, Southeast Asia, in CBRE.
However he adds that industrial occupiers have been searching for assumptions with greater specifications and improved efficacy. This led to some two-tier leasing operation by the mill division in 2019, as industrial improvements with greater specifications older, traditional industrial buildings.
“The 10.5% vacancy [from the mill segment] at 3Q2019 comprised an increasing pool of empty, ageing industrial inventory of roughly 53.85 million sq ft. This spanned several landlords to tackle asset enhancement projects on elderly industrial inventory in an attempt to unlock value by repositioning and redeveloping resources together with under- utilised gross floor space,” he states.
In accordance with Colliers, these improvements include greater power capabilities, high-floor loading capacity, contemporary ventilation and heating systems, higher ceilings and much better loading bay centers. Redevelopment could also improve connectivity between adjoining buildings and to transport nodes.
Reits dip into specialised resources
Industrial investment activity was relatively healthy in 2019, clocking in deals worth roughly $2.99 billion. The largest bargain of the year, in relation to transacted prices, happened in November when Mapletree Commercial Trust obtained Mapletree Business City II, a top campus-style business park development, by its host Mapletree Investments for about $ 1.55 billion.
In November, Ascendas Reit obtained two business-park possessions, Nucleos and FM Global Centre, in the host CapitaLand to get a combined worth of $380 million.
This includes StorHub’s portfolio of 12 self-storage properties having a total lettable area of approximately 800,000 sq ft.
Meanwhile, the biggest industrial leasing bargain in 2019 has been Google’s growth into Alexandra Technopark, taking up near 344,100 sq feet of industrial area.
Another notable leasing bargain happened in January when e-commerce company Shopee rented all 240,000 sq feet at 5 Science Park Drive, a redevelopment of the former Fleming and Faraday buildings by Ascendas-Singbridge, because of its growth requirements.