Singapore's industrial sector is near a tipping point, and
rents are expected to decline 7-10 percent on rising vacancy
rates, DBS Vickers said, adding that its top pick among real
estate investment trusts with exposure to the sector is
Mapletree Logistics Trust.
As of 0259 GMT, units of Mapletree Logistics, which owns
logistic assets, were down 0.45 percent at S$1.095 but have
surged 31.7 percent since the start of the year, compared to a
32 percent rise in the FTSE ST Real Estate Industrial Trust
Lower completion of new industrial space over the last few
years had resulted in record low vacancy levels and a strong
surge in industrial capital values and rents since the start of
However, DBS estimates that close to 49.7 million square
feet of industrial space under construction now will be
completed over 2013-2015, which represents more than twice the
annual supply over the last decade.
"As operating conditions get progressively tougher in the
coming quarters, we believe that industrial landlords will
likely see lower retention rates," said DBS in a report.
The brokerage forecasts vacancy rates to rise by 4-5
percentage points as a result and spot rents to decline by 7-10
percent over 2013-2015.