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18-04-2014, 12:50 AM
An honorable member of the Coffee Shop Has Just Posted the Following:
Outlook
Industrial properties will clock the highest rental growth/increment for 2014 among all property sectors. Warehousing, manufacturing and logistics space in Eunos/Kaki Bukit, Penjuru, AMK, Toa Payoh, Pasir Panjang and Alexandra are expected to clock double-digit rental growth in 2014. Rental rates in industrial estates in Kranji, Changi, Tuas and Woodlands are also expected to be higher due to some of the underlying factors discussed below.
Q1 figures is expected to be flat due to adjustments due to seasonal factors but property agents are reporting extremely high contract renewals for the last quarter. Overall upside in 2014 could average near 10%. Industrial rentals are expected to grow at the fastest rate since the pre-1997 bubble.
Underlying Basis
- 2013 saw over 7600 deals in rental deals; an increase of >18% against 2012 and this trend continued in 1Q14 with an pre-announced estimate of over 2000 deals being confirmed. This reflects a healthy stream of renewal and demand increment in industrial property rental.
- Local Industrial Reits control about 16-17% of the rental market, while JTC's share is slightly above 20%. JTC and HDB are one of the providers for the cheapest industrial rental rates locally, setting the base for the industrial market. SMEs are now reporting that their rentals had been substantially increased in 2013 and 2014 to reflect market trends.
when the lease was due for renewal after two years, the rental shot up by almost 65 per cent. We were told that this was following the "market trend". We still renewed the lease as we had invested in equipment for the business. But the rent continues to rise every term by at least 30 per cent. The latest occasion was last month - which saw another 35 per cent increase - when we were told by the landlord that one-year leases were the new policy. We were also told that rent would probably increase by another 30 per cent to 40 per cent next year.
http://www.straitstimes.com/premium/...ation-20140331 (http://www.straitstimes.com/premium/forum-letters/story/no-room-negotiation-20140331)
- Property agents are also reporting that a large portion of new 2014 industrial space supply of 30million sqft (estimate) being used as dormitories due to surging lodging costs. Dormitory rates increased in excess of 10% in 2013 and this momentum is expected to continue until 2017 due to stricter regulations imposed on dorm amenities and living conditions after the SMRT strikes. Business-owners seeking to reduce to reduce/hedge workers' dorm expense are procuring B2 industrial units to house their own blue-collar workers. It is legal for business-owners to turn industrial properties into workers' dorm (for their own staff use).
- The increasing presence of mega industrial conglomerates such as Rolls-Royce brought along many rich downstream suppliers which altered the local industrial landscape.
Click here to view the whole thread at www.sammyboy.com (http://sammyboy.com/showthread.php?179680-Market-Whisper-Bullish-Industrial-rentals-outlook-in-2014&goto=newpost).
Outlook
Industrial properties will clock the highest rental growth/increment for 2014 among all property sectors. Warehousing, manufacturing and logistics space in Eunos/Kaki Bukit, Penjuru, AMK, Toa Payoh, Pasir Panjang and Alexandra are expected to clock double-digit rental growth in 2014. Rental rates in industrial estates in Kranji, Changi, Tuas and Woodlands are also expected to be higher due to some of the underlying factors discussed below.
Q1 figures is expected to be flat due to adjustments due to seasonal factors but property agents are reporting extremely high contract renewals for the last quarter. Overall upside in 2014 could average near 10%. Industrial rentals are expected to grow at the fastest rate since the pre-1997 bubble.
Underlying Basis
- 2013 saw over 7600 deals in rental deals; an increase of >18% against 2012 and this trend continued in 1Q14 with an pre-announced estimate of over 2000 deals being confirmed. This reflects a healthy stream of renewal and demand increment in industrial property rental.
- Local Industrial Reits control about 16-17% of the rental market, while JTC's share is slightly above 20%. JTC and HDB are one of the providers for the cheapest industrial rental rates locally, setting the base for the industrial market. SMEs are now reporting that their rentals had been substantially increased in 2013 and 2014 to reflect market trends.
when the lease was due for renewal after two years, the rental shot up by almost 65 per cent. We were told that this was following the "market trend". We still renewed the lease as we had invested in equipment for the business. But the rent continues to rise every term by at least 30 per cent. The latest occasion was last month - which saw another 35 per cent increase - when we were told by the landlord that one-year leases were the new policy. We were also told that rent would probably increase by another 30 per cent to 40 per cent next year.
http://www.straitstimes.com/premium/...ation-20140331 (http://www.straitstimes.com/premium/forum-letters/story/no-room-negotiation-20140331)
- Property agents are also reporting that a large portion of new 2014 industrial space supply of 30million sqft (estimate) being used as dormitories due to surging lodging costs. Dormitory rates increased in excess of 10% in 2013 and this momentum is expected to continue until 2017 due to stricter regulations imposed on dorm amenities and living conditions after the SMRT strikes. Business-owners seeking to reduce to reduce/hedge workers' dorm expense are procuring B2 industrial units to house their own blue-collar workers. It is legal for business-owners to turn industrial properties into workers' dorm (for their own staff use).
- The increasing presence of mega industrial conglomerates such as Rolls-Royce brought along many rich downstream suppliers which altered the local industrial landscape.
Click here to view the whole thread at www.sammyboy.com (http://sammyboy.com/showthread.php?179680-Market-Whisper-Bullish-Industrial-rentals-outlook-in-2014&goto=newpost).