“Geniune sellers have since lowered their price expectations after numerous months of marketing and are more willing to consider any reasonable offer.”

-Catherine Ng, Associate Director, Industrial, Knight Frank

Outlook

Muted transaction volume to remain for 4Q 2015

Softer global economic conditions and increasing pessimistic outlook of manufacturers’ business expectations in the next six months (ending March 2016) are likely to contribute to the low transaction situation of industrial units till end 2015. Buyers will continue to be mindful of their intended acquisitions and instead likely to consider short-term lease as a viable alternative if there is no suitable spaces available.

Some industrialists who prefer to own industrial spaces are likely to commit after months of ”window-shopping’ for suitable and reasonably-priced spaces. Genuine sellers have since lowered their price expectations after numerous months of marketing and are more willing to consider any reasonable offers. However, such successful transactions may be limited. Together with the general slowdown of buying activities, a muted transaction volume is expected for 4Q 2015.

Continued strain on rental market

Facing strong market competition, landlords continued to be aggressive in attracting new tenants while retaining existing tenants. Achieved renewal rents deviated from usual trend of higher achievable rents than new leases, and were concluded on par or slightly higher than new leases. Landlords that own dated building specifications are likely to accept a lower than markets rents to secure tenants or take the opportunity to conduct assets enhancements to improve its building specifications.

Given an estimated 8.4 million sq ft of industrial space that will be completed by 4Q 2015, downward pressure on rents will continue with overall industrial rents likely to reduce by between 3% and 5% y-o-y in 4Q 2015.

Click below link to download KF – Industrial 3Q2015 by our company – Knight Frank.


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