Cooling measures on industrial property market unlikely: analyst

 ⋅ May 22, 2012 ⋅

 

Continued rise in property demand and prices have raised concerns that another round of cooling measures may be on the cards.

Some analysts said the focus to cool down the sector may turn to industrial properties this time.

But some said such measures are unnecessary as there are ways to keep a lid on industrial property prices.

Ease in obtaining mortgage loans at attractive interest rates is among the factors that pushed the residential property sector higher.

Analyst said this buying sentiment has now spilled over to the industrial property segment.

Industrial property prices increased 7.2 per cent in the first quarter, according to the URA Property Price Index.

The rapid price increases in industrial properties have sparked concerns that the government may step in with cooling measures for the segment.

However, analysts said there are other ways to tackle the problem.

Research Head at the SLP International Nicholas Mak said: “There are property agents, who used to sell residential properties and they do it in a very aggressive manner, are moving into the industrial property market. And they are using that same tactics of very aggressive marketing. And they are not experienced in industrial property sector.”

Property experts are also calling out for more enforcements on real estate agents to accurately market and advertise industrial premises.

What an industrial property can be used for must also be clearly stated in the Sale And Purchase agreement, a requirement by the URA on developers.

Some Property experts observed it won’t be easy to differentiate investors from genuine users in the pool of industrial property buyers. And any government attempts to further detail what a particular industrial space can be used for would stifle businesses which must be flexible in a volatile global economy.

Executive director, Industrial Services (Asia), Colliers, Tan Boon Leong said: “It is very difficult to impose the same type of cooling measures as what we have witnessed in residential properties, and try to impose it on the industrial market. This is because industrial activities are important and forms the backbone of the economy. Personally, I think the current measures are adequate.”

Authorities have also been increasing industrial land supply to cool the sector.

But new Industrial Government Land Sale sites must develop a single strata unit gross floor area of at least 150 square metres.

Still, experts said they are not too perturbed as industrial properties make up just a small segment of the property sector.

Donald Han, special advisor, HSR, said: “The reason the government has not taken a more proactive measure is mainly because the number of transactions that we have seen in the industrial sector is probably 15 per cent compared to the whole transaction volume.”

Some experts also forecast the market forces to cool the industrial property sector – naturally.

The gloomy global economy is expected to bring rentals of industrial space to a flatline in the current quarter.

A decline is also possible at the end of the year.

Source : Channel NewsAsia – 22 May 2012