Industrial property in Singapore has been forecast to outperform residential, office and retail property over the next few years. Cushman and Wakefield reported that capital values for industrial properties increased by up to 22% in 2010, and the vice-chairman, Donald Han, expects a healthy 15% increase this year. He feels that as long as the economy and manufacturing sector continues to expand the market could enjoy another two years of steady capital values and rental increase.
Demand for industrial property has increased due to the government cooling measures which have forced speculators to move from expensive residential property to the more affordable industrial properties.
Industrial property is currently costing around US$240-US$280 per square foot which means a reasonably sized unit of 1000 to 1500 ft.² would cost less than US$400,000. This compares very favourably with the cost of residential property as this amount would not buy much more than a shoebox.
Although prices of residential property rose sharply last year, analysts are currently hedging their bets about which way the market is heading as the government measures begin to take full effect. Most agree that prices cannot keep on rising so steeply, even though the most recent data shows that prices are still below pre-global financial crisis levels.
The prices of residential property rose by 2.1% during the first quarter of this year which is slightly down from the 2.7% growth recorded in the last quarter of 2010. Prices have now increased for seven straight quarters, although the number of sales is slowing.
These differences in the relative strength of different sectors to illustrate the local and country-specific factors driving the real estate performance. Was, for example, a combination of a tight housing market and strong demand for flat.
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