It jumped 35% YoY as the number of firms optimistic on the manufacturing sector stayed on the upside.
This chart from Maybank Kim Eng shows that overall industrial leasing activity jumped 35% YoY in the first two months of 2018, the strongest since Q3 of 2013 (+27% YoY).
This is supported by rising business optimism: a 1% net weighted balance of firms surveyed by the Economic Development Board (EDB) in Q4 of 2017 were positive on the manufacturing sector outlook for the six months from January to June 2018, which should help strengthen pre-commitment levels for upcoming supply.
According to the broker, this is one of the indicators of the industrial property market bottoming out. "We expect stronger leasing demand and manufacturing growth, along with a broader recovery in services," said Maybank KE analyst Chua Su Tye.
We remain constructive on industrial REITs, despite the recent pullback in share prices against a rising interest rate regime. We see positive earnings momentum led by the large cap names from improving supply and demand, with near-term catalysts rising occupancies and stable/positive rental reversions.
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