TODAY Online : Quick recovery for the sector?

Quick recovery for the sector?

05:55 AM Jan 14, 2010

by Mok Fei Fei feifei@mediacorp.com.sg

SINGAPORE - The industrial property sector is poised for a quick recovery, if the bottoming-out of the residential property sector was anything to go by.

The turnaround is also expected to be as early as the fourth quarter of last year or at the latest, by the second quarter of this year, according to property consultant Colliers International in a report released yesterday.

Historically, the industrial property sector lags the residential property market by one to three quarters, the report said.

Since the residential property market has already bottomed out in the third quarter last year, Colliers expects the industrial property sector to follow suit soon.

During the recent peak, however, the time lag between the two sectors narrowed to just one quarter, noted Colliers, with the industrial property price index cresting in the third quarter of 2008, just one quarter behind the residential property price index, which reached its peak in the second quarter of the same year.

"The smaller time lag in the recent cycle could be a sign that the link between the two sectors is drawing closer," said the report by Colliers' research and advisory director Tay Huey Ying and senior research analyst Lee Sze Teck.

A return in demand

Also, Colliers noted that there's been a return of investors to the industrial strata market, which is a sign that demand is returning.

Some of this demand is spillover from the buying euphoria in the residential sector, added Colliers.

Another factor that has been influencing the pick up in industrial properties is improved affordability, with an increasing number of developments with unit sizes of less than 1,000 square feet or on short leasehold titles.

Colliers further noted that the Government Land Sales programme is picking up steam as well and this is an indicator that industrial strata prices are poised to pick up soon.

For the first half of this year, there are two industrial sites on the Confirmed List and eight sites on the Reserve List.