More strata industrial properties were sold at a loss this year as rents and prices continued to weaken. In particular, the proportion of unprofitable deals for shoebox units spiked from 6% in 2015 to 22% in 2016 to date, while the average profit per transaction dropped from $162,827, or 42%, last year to $111,449, or 30%, this year.
Shoebox industrial units are defined as those that are less than 150 sq m. The study by The Edge Property matched resale and sub-sale caveats of strata industrial units with previous caveats, based on URA Realis’ caveat records as at Nov 27. Profit or loss was computed based on the difference in selling and purchase prices, taking into account the prevailing Seller’s Stamp Duty (SSD) rate, where applicable, but excluding other costs.
The biggest loss for a shoebox strata industrial unit so far this year accrued to a 1,539 sq ft unit at North Spring Bizhub that was bought for $1.2 million, or $767 psf, in a subsale in February 2014. The seller sustained a loss of $383,900 after paying a 5% SSD, or $41,900, from the sale of the unit at $838,000, or $544 psf, in August. North Spring Bizhub is a 60-year leasehold development on Yishun Industrial Street 1 that was completed in 2013.
Separately, a 1,163 sq ft unit at One Pemimpin was sold at a loss of $238,000, the second highest seen this year. The seller had bought the unit from the developer at $1.2 million, or $1,065 psf, in July 2012 and sold it at $1 million, or $860 psf, in March. One Pemimpin, completed in 2012, is located on Pemimpin Drive, off Marymount Road. It sits on a 999- year leasehold site.
Island-wide vacancy rate for factory space climbed for the sixth consecutive quarter to reach a decade-high 11% in 3Q2016, according to the latest JTC data published on Oct 27. The property price index and rental index of industrial property declined 1.7% and 2% q-o-q respectively in 3Q2016.
In its recent report, property research house Savills says the monthly rents for its basket of prime factory and warehouse properties tumbled 6.3% q-o-q to $1.50 psf on average in 3Q2016. Meanwhile, upper-storey prices of its 60-year leasehold industrial units fell 4.7% q-o-q to $445 psf in the quarter, the lowest recorded price since 2013. Prices of 30-year leasehold units also marked a new low at $361 psf after a 2.1% q-o-q fall in 3Q2016. Owing to limited supply, prices of freehold industrial property were the most resilient, with a 1.4% q-o-q decline to $680 psf.