On the back of the recovering economy, islandwide private industrial rents held firm after declining for five consecutive quarters, according to estimates by DTZ Research.

Average monthly gross rents of first-storey and upper-storey private industrial space were unchanged at $1.95 and $1.55 psf per month respectively in Q1 2010 from the previous quarter. Average monthly gross rents of first-storey and upper-storey private industrial space were 17.0% and 24.4% respectively below the peak in Q3 2008.

Average gross rents of hi-tech industrial properties, which include business park and science park space, inched up by 1.6% quarter-on-quarter (q-o-q) to $3.15 per sq per month in Q1 2010, a reversal from the 3.1% fall in Q4 2009. Rents in Q1 2010 were 30% below the peak in Q3 2008.

Capital values of private industrial space continued rising for the third consecutive quarter. The buying frenzy in H2 2009 continued into the new year as investors and owner-occupiers were drawn by the affordable quantum.

Average capital values of first-storey and upper-storey conventional freehold industrial space have edged up by 2.0% q-o-q to $505 psf and 4.6% q-o-q to $340 psf respectively. Compared to the trough in Q2 2009, average capital values have risen by 4.1% q-o-q for first-storey space and 7.9% q-o-q for upper-storey space.

According to DTZ Research, new supply of 9.3 million sq ft and 8.3 million sq ft are expected in 2010 and 2011 respectively, slightly below the historical 10-year average new supply of 10 million sq ft. Business park space constituted 18.0%  of the supply pipeline from 2010-2013, more than half of which will be completed in 2010.

"With the economy on the growth path, the industrial rental market is expected to bottom in 2010. The recovery will however be at a slow pace in view of the new supply coming on stream," noted Chua Chor Hoon, Head of DTZ South-east Asia Research.