Property prices moderate in 1996

Property prices moderate in 1996

SINGAPORE (AFP): Singapore's industrial property prices, seen as the highest in Southeast Asia, should moderate in 1996 in line with government moves to ensure the city state remains competitive, analysts said yesterday.

But office rentals and prices in land-starved Singapore are likely to stay firm, they said.

Industrial property capital values here have surged some 60 percent over the last two years while prime office rentals too have held up.

"We do expect industrial property prices to moderate a little but partly because of the government's stated intention to keep the international competitiveness of Singapore," Tay Kay Poh of Knight Frank property consultants told AFP.

Tay said the government had shown concern over rising industrial property prices which rose by about 40 percent this year.

Facing a buoyant manufacturing sector, the darling of the Singapore economy, the government released about 50 hectares (123 acres) of state land for industrial use this year and is to release a like amount of land next year.

"I think the impact of all this is not to really bring down prices but simply moderate them because demand has been strong. But it will take a while for the tightness to be released," Tay said.

State-owned Jurong Town Corp., which prepares industrial land for use in Singapore, said in a statement over the weekend that demand for industrial land has been "exceptionally strong."

Based on latest statistics available, net allocation of industrial land more than doubled from the previous year to 220 hectares (543 acres) in 1994, it said.

Spencer Neo of Jones Lang Wootton was reported saying by The Business Times yesterday that rapid growth in capital values of industrial land in Singapore in 1995 was "above all, a reflection of the amount of investor funds circulating in the market seeking investment opportunities."

Meanwhile, office rentals and prices in Singapore would edge upwards next year but a charge-up could begin in 1997 when new supply looks set to fall sharply, market watchers were reported as saying by The Straits Times.

"We expect rentals of prime office space to hold at their current levels of S$9 to S$10 (US$6.42 to $7.14) per square foot for the next 12 months before charging up again to S$ 12 per square foot sometime in early or mid-1997, and especially in 1998," Leong Chi Meng of Vickers Ballas said.

Analysts expected demand to remain firmly in line with expected growth of employment in three sectors -- commerce, transport and communication and finance and business -- and as multinationals continued to expand in Singapore.

"Most people agree that office market vacancy rates are still very low in prime areas and rentals have held up very well. There actually isn't new space coming on stream in the central business district areas in the next 12 months or so," Tay said.