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Market Whisper: Bullish Industrial rentals outlook in 2014

Runifyouhaveto

Alfrescian
Loyal
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/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.
 
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Tuayapeh

Alfrescian (InfP)
Generous Asset
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/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.



Sounds to me like more "upturn the downturn" bullshit......

talk/sing/wayang/deny your way out of an impending massive recession........

Stinkapore better know that the development or growth action is likely to be in indonesia/burma/vietnam.......not here .....



As for the fucking presstitutes......we all know what a fucking barrel of laughs their masters can be......especially that useless fuckerooo pwabye kiah lim siah sway who is on his way to help the pap cunts fucking lose their east coast grc,.....thank god sinkies are finally waking up and seeing the bloody fool for the yeowkwee village idiot who he truly is....

<iframe width="560" height="315" src="//www.youtube.com/embed/CTMMRrxx-Ug" frameborder="0" allowfullscreen></iframe>
 

Runifyouhaveto

Alfrescian
Loyal
Another point to share,

I also noticed that many of the new industrial land-parcels released for tenders are of shorter lease, eg. 30-years or even 21-years.

30-years lease looks set to be the new norm for industrial properties going forward.

It is like selling 30-years HDB BTO instead of 99 so that the quantum appears to be smaller. In actual fact, it is not much cheaper if you spread out the depreciation based on a shorter-lease against purchase price. Besides, the construction costs of building a 30-years or 60-years industrial warehouse should be similar too (due to safety regulations).
 

Runifyouhaveto

Alfrescian
Loyal
- 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/forum-letters/story/no-room-negotiation-20140331

getting more cornered.

Boustead in talks to expand industrial portfolio in Singapore
Boustead said it has "commenced certain discussions'' with regards to "its strategy to expand its industrial leasehold portfolio to enhance recurring income and also to achieve a critical mass in order to unlock the value of its portfolio".
http://www.businesstimes.com.sg/bre...xpand-industrial-portfolio-singapore-20140421
 
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Runifyouhaveto

Alfrescian
Loyal
On a year-on-year basis, prices of all industrial space in 1Q 2014 rose by 2.5%, significantly slower than the average increase of 20.2% per year over the past 4 years. Similarly, the 4.1% year-on-year increase in prices of multiple user factory space is also significantly slower than the average increase of 19.9% per year over the past 4 years.

On a quarter-on-quarter basis, prices of all industrial space rose by 3.8%, following a 3.3% decrease in the previous quarter. Prices of multiple-user factory space rose 3.9% in 1Q 2014, following a 1.2% fall in the previous quarter. This is mainly because multiple-user factories transacted in 1Q 2014 comprise of more newer and freehold properties compared to transactions in the previous quarter.
http://www.jtc.gov.sg/Publications/Industrial-Property-Statistics/Pages/Prices.aspx

On a year-on-year basis, rentals of industrial space rose by 4.9% in 1Q 2014
http://www.jtc.gov.sg/Publications/Industrial-Property-Statistics/Pages/Rentals.aspx
 
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