Industrial REIT’s price, rental indices suffer fifth dip in a row

Indices slumped 2.3% and 1.7%, respectively.

The industrial sector's underwhelming performance has continued to derail real estate investment trust (REITs)'s growth, posing an average DPU growth of -0.1%.

According to a report by OCBC Investment Research, six industrial REITs registered lower occupancy rates in Q2, with subdued rental reversion figures ranging from Cambridge Industrial Trust's figure at -15.8% to Ascendas REIT's 4.1%.

The report said the industrial REITs have suffered the fifth consecutive quarter of decline for price and rental indices.

"The price and rental indices of all industrial properties dipped 2.3% and 1.7% QoQ, respectively, in 2Q16. This was the fifth consecutive quarter of decline for both indices," it noted.

Cache Logistics trust posed the slowest DPU growth at -7.1%. Viva Industrial Trust registered the second lowest DPU growth at -5.4%. Soilbuild REIT also registered a negative DPU growth at -3.1%.

OCBC said industrial REITs outlook remains challenging given the expectations of the continued softness in the global economy, manufacturing and oversupply concerns.

To recall, an estimated 1.6m and 2.0m sq m of industrial space is expected to come into the Singaporean market in 2H16 and 2017.

"These figures appear ominous when taken in comparison with the average annual supply of 1.8m sq m and average annual demand of 1.2m sq m in the past three years," OCBC said.