5.0
OUTLOOK
Industrial rents see pressure in 2015
The outlook for manufacturing is relatively subdued, with a net weighted balance of 3% of manufacturers
expecting a weak business situation in H1 2015 due to the mixed global economic prospects.
Nonetheless, there is some optimism for the chemicals industry, given the expectations of a lower
operating cost environment due to declining oil prices. Meanwhile, the Economic Development
Board expects the level of investment commitments to moderate in line with Singapore’s economic
restructuring as well as the increased uncertainty of the global economic environment. In particular, fixed
asset investments are forecast to moderate from $11.8 billion in 2014 to $9.0 to $11.0 billion in 2015.
2015 will see a substantial completion of private factory space, with many being strata-titled. Coupled
with the economic prospects, this will weigh on multiple-user factory rents in 2015. Given the challenging
operating environment, industrialists are expected to remain cost-sensitive. Meanwhile, many landlords
have lowered their rental expectations in a bid to secure tenants.
The rental outlook for private warehouse space is also cautious. Notwithstanding this, while the
segment faces significant new completions in 2015, the majority of the expected completions are
built-to-suit/owner-occupied. This may help moderate the overall pressure on warehouse rentals
in 2015.
Prices expected to moderate in 2015
Amid the anticipated decline in rentals, expectations of a rise in interest rates in H2 2015 and the
significant completion of strata-titled factory spaces as well as the TDSR framework continuing to
impact the overall property sales market, industrial prices are expected to moderate in 2015.
Limiting Conditions
Where it is stated in the report that information has been supplied to DTZ Debenham Tie Leung (SEA) Pte Ltd (“DTZ”) in the
preparation of this report by the sources listed, this information is believed to be reliable and DTZ will accept no responsibility
if this should be otherwise. All other information stated without being attributed directly to another party is obtained from
DTZ’s searches of records, examination of documents or enquiries with relevant government authorities.
The forward-looking statements in this report are based on DTZ’s expectations and forecasts for the future. These statements
should be regarded as DTZ’s assessment of the future, based on certain assumptions about variables which are subject to
changing conditions. Changes in any of these variables may significantly affect DTZ’s forecasts.
Utmost care and due diligence have been taken in the preparation of this report. DTZ believes that the contents are accurate
and its professional opinion and advice are based on prevailing market conditions as at the date of the report. As market
conditions do change, DTZ reserves the right to update its opinion and forecasts based on the latest market conditions.
DTZ gives no assurance that the forecasts and forward-looking statements in this report will be achieved and undue reliance
should not be placed on them.
DTZ or persons involved in the preparation of this report disclaim all responsibility and will accept no liability to any other
party. None of the whole, any part or any reference thereto may be published in any document, statement, circular or
communications with third parties (save for this Annual Report), without DTZ’s prior written consent of the form or context
in which it will appear.
SABANA REIT
|
ANNUAL REPORT 2014
37
