Industrial rents, prices extend decline in Q3; projects hit by Covid-19 construction delays: JTC

SINGAPORE (THE BUSINESS TIMES) – Rents and prices of industrial space continued to fall in the third quarter of 2020, latest data from industrial land and infrastructure agency JTC Corp shows.

Rents of industrial space declined by 0.9 per cent quarter on quarter and 1.6 per cent year on year.

Prices slipped 2.2 per cent quarter on quarter and 3.9 per cent year on year.

However, the occupancy rate rose slightly by 0.2 percentage point on a quarter-on-quarter basis and 0.3 percentage point on a year-on-year basis to 89.6 per cent. The rise was driven by an increase in demand for storage amid a delay in new completions.

In the third quarter, due to the impact of Covid-19 on the construction sector, only 24,000 square metres (sq m) of new industrial space was completed, the lowest quarterly completion on record and a significant reduction from the average quarterly completion of around 270,000 sq m in the past three years.

Among the segments, the occupancy rate for multiple-user factory space, warehouse space and business-park space all increased on a quarter-on-quarter basis, while the occupancy rate for single-user factory fell marginally by 0.1 percentage point.

As at the end of the third quarter, there was 50 million sq m of industrial space.

As at the same date, around 0.6 million sq m of new industrial space is expected to be completed in the fourth quarter of 2020. This is a sharp reduction from the 1.3 million sq m of new industrial space originally expected to be completed in the seond half of this year, as reported in JTC’s earlier Q2 2020 report.

Completion of 0.7 million sq m of new industrial space has been delayed to 2021 and 2022 due to the impact of Covid-19 on the construction sector.

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“We can expect further delays in completion for some industrial building projects, as project owners and contractors adjust to meet BCA’s Safe Restart requirements,” JTC said in its latest report released on Thursday (Oct 22).

It added that the rapidly evolving Covid-19 situation will continue to weigh on the industrial property market.

“There would be continued downward pressures on prices and rentals in the coming quarters, as well as construction delays for some projects. JTC will continue to monitor the market closely and support the needs of industrialists.”

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