Friday, February 13, 2009
Take-Up Of JTC Industrial Space Falls 33% In Q4
Source : The Business Times, February 12, 2009
But termination of ready-built factory space surprises with 30% fall
NET take-up of industrial space fell again in Q4 2008 for industrial landlord JTC Corporation, as the downturn continued to weigh on businesses.
JTC's 2008 facilities report released yesterday shows the agency leased or rented out 20,000 sq metres of ready-built factory space in Q4 - a 33 per cent slide from Q3. Affected locations included flatted factories, business parks and standard factories.
Some observers expected companies to return more space to JTC as the economy weakened, but this did not happen in Q4. In fact, termination of ready-built factory space dropped 30 per cent from Q3 to 21,200 sq m.
Most of the terminations - 48 per cent - were because businesses consolidated their operations. The manufacturing sector, which includes electronics and precision engineering, accounted for more than half of the pull-back.
JTC said the termination size was larger in Q3 because more companies moved out of space scheduled for 'product renewal' - this is when JTC systematically retires ageing facilities to redevelop sites.
As DTZ's senior director for research Chua Chor Hoon also suggested, some companies could have sub-let excess space instead of pulling out altogether in Q4. This helps them avoid relocation costs.
After accounting for terminations, JTC's net allocation of ready-built factory space in Q4 was minus-1,200 sq m, swinging further into negative territory from minus -500 sq m in Q3.
Despite the weak Q4 showing, ready-built factory space enjoyed a decent net take-up rate for the whole of 2008 - net allocation was 90,700 sq m, up from 88,700 sq m in 2007.
Much of the improvement was due to JTC leasing or renting out more business park space, especially in the first phase of the Fusionopolis development.
The occupancy rate for ready-built factory space also rose in 2008 - to a 10-year high of 96.8 per cent.
Take-up of JTC's prepared industrial land fell in Q4. Across areas such as Jurong Island and Tuas Biomedical Park, which come complete with infrastructure for lessees to develop their facilities, net allocation was 17.5 hectares - 49 per cent down from Q3.
Terminations fell more than 70 per cent to 6.1 ha in Q4. Industries supporting the manufacturing sector accounted for most of the pull-back.
For 2008, net allocation of prepared industrial land was 200.9 ha. This was 41 per cent less than the 10-year high of 341.2 ha in 2007.
JTC said 2008's 'sustained performance was against the backdrop of global economic uncertainties and a very challenging environment towards the latter part of the year'.
The manufacturing sector took up a much smaller proportion of prepared industrial land last year - 40 per cent of the gross allocation of 264.8 ha went to the sector, compared with 74 per cent in 2007.
Weakness in the industrial property sector has emerged in the past few months. Data from the Urban Redevelopment Authority in January reflected lower rents and prices in Q4 2008 after more than four years of steady increases.
But termination of ready-built factory space surprises with 30% fall
NET take-up of industrial space fell again in Q4 2008 for industrial landlord JTC Corporation, as the downturn continued to weigh on businesses.
JTC's 2008 facilities report released yesterday shows the agency leased or rented out 20,000 sq metres of ready-built factory space in Q4 - a 33 per cent slide from Q3. Affected locations included flatted factories, business parks and standard factories.
Some observers expected companies to return more space to JTC as the economy weakened, but this did not happen in Q4. In fact, termination of ready-built factory space dropped 30 per cent from Q3 to 21,200 sq m.Most of the terminations - 48 per cent - were because businesses consolidated their operations. The manufacturing sector, which includes electronics and precision engineering, accounted for more than half of the pull-back.
JTC said the termination size was larger in Q3 because more companies moved out of space scheduled for 'product renewal' - this is when JTC systematically retires ageing facilities to redevelop sites.
As DTZ's senior director for research Chua Chor Hoon also suggested, some companies could have sub-let excess space instead of pulling out altogether in Q4. This helps them avoid relocation costs.
After accounting for terminations, JTC's net allocation of ready-built factory space in Q4 was minus-1,200 sq m, swinging further into negative territory from minus -500 sq m in Q3.
Despite the weak Q4 showing, ready-built factory space enjoyed a decent net take-up rate for the whole of 2008 - net allocation was 90,700 sq m, up from 88,700 sq m in 2007.
Much of the improvement was due to JTC leasing or renting out more business park space, especially in the first phase of the Fusionopolis development.
The occupancy rate for ready-built factory space also rose in 2008 - to a 10-year high of 96.8 per cent.
Take-up of JTC's prepared industrial land fell in Q4. Across areas such as Jurong Island and Tuas Biomedical Park, which come complete with infrastructure for lessees to develop their facilities, net allocation was 17.5 hectares - 49 per cent down from Q3.
Terminations fell more than 70 per cent to 6.1 ha in Q4. Industries supporting the manufacturing sector accounted for most of the pull-back.
For 2008, net allocation of prepared industrial land was 200.9 ha. This was 41 per cent less than the 10-year high of 341.2 ha in 2007.
JTC said 2008's 'sustained performance was against the backdrop of global economic uncertainties and a very challenging environment towards the latter part of the year'.
The manufacturing sector took up a much smaller proportion of prepared industrial land last year - 40 per cent of the gross allocation of 264.8 ha went to the sector, compared with 74 per cent in 2007.
Weakness in the industrial property sector has emerged in the past few months. Data from the Urban Redevelopment Authority in January reflected lower rents and prices in Q4 2008 after more than four years of steady increases.
Global Property Investment Expected To Slide Further
Source : The Business Times, February 12, 2009
(EDINBURGH) Global real estate spending on office buildings, stores and apartments may fall another 5.3 per cent this year to US$412 billion as lenders keep a tight rein on credit, property broker Cushman & Wakefield Inc said.
Lack of credit pushed commercial property acquisitions down 59 per cent to US$435 billion last year, the lowest since 2004, New York-based Cushman said.
'Although virtually all global markets had a decline in investment, it's been the mature markets which have suffered most,' David Hutchings, Cushman's London-based head of research for Europe, the Middle East and Africa, said in a statement yesterday. 'Emerging markets now account for 22 per cent of global investment when as recently as 2006 they only accounted for 9 per cent.'
Banks have been reluctant to lend or refinance real estate loans as they try to conserve cash after losses and write-downs totalling US$1.1 trillion. Recessions in the US and some European countries have crimped demand for office and retail space, causing values to drop because landlords cannot command as much in rent.
Commercial property values have fallen most in Europe, where yields rose 111 basis points, compared with an average 31 basis point increase in North America, Cushman said. The yield on property moves inversely to prices. One basis point is 0.01 percentage point.
'Pricing in many countries at the market peak was aggressive and became divorced from the reality of underlying growth and income,' Mr Hutchings said. 'Pricing may now be becoming too conservative in some markets.' - Bloomberg
(EDINBURGH) Global real estate spending on office buildings, stores and apartments may fall another 5.3 per cent this year to US$412 billion as lenders keep a tight rein on credit, property broker Cushman & Wakefield Inc said.
Lack of credit pushed commercial property acquisitions down 59 per cent to US$435 billion last year, the lowest since 2004, New York-based Cushman said.
'Although virtually all global markets had a decline in investment, it's been the mature markets which have suffered most,' David Hutchings, Cushman's London-based head of research for Europe, the Middle East and Africa, said in a statement yesterday. 'Emerging markets now account for 22 per cent of global investment when as recently as 2006 they only accounted for 9 per cent.'
Banks have been reluctant to lend or refinance real estate loans as they try to conserve cash after losses and write-downs totalling US$1.1 trillion. Recessions in the US and some European countries have crimped demand for office and retail space, causing values to drop because landlords cannot command as much in rent.
Commercial property values have fallen most in Europe, where yields rose 111 basis points, compared with an average 31 basis point increase in North America, Cushman said. The yield on property moves inversely to prices. One basis point is 0.01 percentage point.
'Pricing in many countries at the market peak was aggressive and became divorced from the reality of underlying growth and income,' Mr Hutchings said. 'Pricing may now be becoming too conservative in some markets.' - Bloomberg
Shaftesbury Warns Of Rising Office Vacancies In London
Source : The Business Times, February 12, 2009
(LONDON) UK property firm Shaftesbury said yesterday that shops and restaurants in its London portfolio continue to trade well despite the economic downturn, but warned of rising vacancies and falling rents in its offices.
No downturn here: Shaftesbury, which owns about 470 properties in London's West End, said demand from tenants for shops and restaurants remained healthy
'The general economic environment remains challenging and we expect to see an increase in vacancies in the coming months,' Shaftesbury said in an interim statement, adding it believed its West End properties would continue to be in demand.
Shaftesbury's stock price was up 0.7 per cent at 298 pence yesterday morning, while the London market's property stocks sector index was down 1.1 per cent. The FTSE 100 index was up 0.2 per cent.
The company, which owns about 470 properties in London's West End district, said demand from prospective tenants for shops and restaurants remained healthy and it had not seen any fall in the rental values of such spaces.
'This year, the weakness of sterling is bringing more visitors from the euro zone and should also increase the volume of domestic visitors to the West End, as travel to overseas destinations has become relatively more expensive,' it said.
Shaftesbury, which also owns 400,000 square feet of offices and 280 apartments in the upper floors of its properties, said office rentals were now declining, while office vacancies have quadrupled to 36,000 sq ft since the end of September 2008.
As at end-Jan Shaftesbury had a total 67,500 sq ft of vacant shops, restaurants and office space, down from 71,000 sq ft at end-September 2008.
The estimated rental value for the vacant commercial space - including properties under offer and those being refurbished - fell to around £pounds;2.5 million (S$5.52 million) at end-January, from £pounds;3.3 million from four months ago, it said.
Shaftesbury said its bank borrowings at the end of January stood at £pounds;473 million, against committed facilities of £pounds;600 million, while its overall cost of borrowings fell to 5.1 per cent from 6.1 per cent at end-September 2008. -- Reuters
(LONDON) UK property firm Shaftesbury said yesterday that shops and restaurants in its London portfolio continue to trade well despite the economic downturn, but warned of rising vacancies and falling rents in its offices.
No downturn here: Shaftesbury, which owns about 470 properties in London's West End, said demand from tenants for shops and restaurants remained healthy'The general economic environment remains challenging and we expect to see an increase in vacancies in the coming months,' Shaftesbury said in an interim statement, adding it believed its West End properties would continue to be in demand.
Shaftesbury's stock price was up 0.7 per cent at 298 pence yesterday morning, while the London market's property stocks sector index was down 1.1 per cent. The FTSE 100 index was up 0.2 per cent.
The company, which owns about 470 properties in London's West End district, said demand from prospective tenants for shops and restaurants remained healthy and it had not seen any fall in the rental values of such spaces.
'This year, the weakness of sterling is bringing more visitors from the euro zone and should also increase the volume of domestic visitors to the West End, as travel to overseas destinations has become relatively more expensive,' it said.
Shaftesbury, which also owns 400,000 square feet of offices and 280 apartments in the upper floors of its properties, said office rentals were now declining, while office vacancies have quadrupled to 36,000 sq ft since the end of September 2008.
As at end-Jan Shaftesbury had a total 67,500 sq ft of vacant shops, restaurants and office space, down from 71,000 sq ft at end-September 2008.
The estimated rental value for the vacant commercial space - including properties under offer and those being refurbished - fell to around £pounds;2.5 million (S$5.52 million) at end-January, from £pounds;3.3 million from four months ago, it said.
Shaftesbury said its bank borrowings at the end of January stood at £pounds;473 million, against committed facilities of £pounds;600 million, while its overall cost of borrowings fell to 5.1 per cent from 6.1 per cent at end-September 2008. -- Reuters
UK Commercial Property Values Fall
Source : The Business Times, February 12, 2009
(LONDON) UK commercial property prices fell 3.5 per cent in January, continuing their decline after the market fell 26.8 per cent in 2008, the world's biggest property broker CB Richard Ellis (CBRE) said on Tuesday.
While January's fall in value was not as sharp as the 4.9 per cent drop in December, the decline in rents accelerated slightly to minus 0.9 per cent, according to the CB Richard Ellis Monthly Index.
'January's results were marked by an easing of the negative impact of higher yields, but a pick-up in the rate of rental falls,' said Peter Damesick, head of UK research at CBRE. 'This combination is likely to carry on, with rents continuing their downward movement in the coming months.'
CBRE, one of the biggest contributors of data to benchmark index compiler Investment Property Databank, said property values are now 37.8 per cent below their peak in mid-2007.
Total returns, which comprise rental returns and capital growth, were minus 2.8 per cent in January, and minus 31.6 per cent from their mid-2007 peak, CBRE said. -- Reuters
(LONDON) UK commercial property prices fell 3.5 per cent in January, continuing their decline after the market fell 26.8 per cent in 2008, the world's biggest property broker CB Richard Ellis (CBRE) said on Tuesday.
While January's fall in value was not as sharp as the 4.9 per cent drop in December, the decline in rents accelerated slightly to minus 0.9 per cent, according to the CB Richard Ellis Monthly Index.
'January's results were marked by an easing of the negative impact of higher yields, but a pick-up in the rate of rental falls,' said Peter Damesick, head of UK research at CBRE. 'This combination is likely to carry on, with rents continuing their downward movement in the coming months.'
CBRE, one of the biggest contributors of data to benchmark index compiler Investment Property Databank, said property values are now 37.8 per cent below their peak in mid-2007.
Total returns, which comprise rental returns and capital growth, were minus 2.8 per cent in January, and minus 31.6 per cent from their mid-2007 peak, CBRE said. -- Reuters
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