Average monthly rent for hi-tech space rose 7.8 per cent quarter-on-quarter and 37.5 per cent year-on-year to $2.75 per square foot by end-2007. The surge in rental levels for hi-tech space can be attributed to an increase in demand from traditional office tenants seeking hi-tech space as an alternative due to the steep rise in office rents.

The average occupancy rate for hi-tech space has been improving steadily throughout the year. It was 91.1 per cent at end-2006 and rose to 92.8 per cent at end-2007. At the same time, the average occupancy rate for business parks grew 5.0 percentage points year-on-year to an estimated 89.0 per cent at end-2007.

Bernard Goh, Director, Industrial & Logistic Services said "the increase in rents and occupancy rates for hi-tech space is likely to continue as large injections of office and hi-tech stock are not expected until after 2009."

Likewise, average monthly rents for factory space also increased albeit at a slower pace to $1.45 per square foot and $1.20 per square foot for ground and upper floor units respectively by year-end. Rents for factories rose $0.05 per square foot every quarter for the entire 2007. This was an improvement over 2006 when rents remained at $1.25 per square foot for ground floor units and $1.00 per square foot for upper floor units throughout the year. The average capital values for freehold factories also increased by about 31.0 per cent year-on-year to $435 per square foot and $354 per square foot for ground and upper floor units respectively.

At end-2007, the average monthly rent for warehouses was $1.45 per square foot for ground floor units and $1.15 per square foot for upper floor units, up from $1.25 per square foot and $1.05 per square foot for ground and upper floor units respectively at end-2006. Similarly, the average capital value for warehouses rose by about 10.0 per cent during 2007 to register at $424 per square foot for ground floor units and $370 per square foot for upper floor units.

The occupancy rate for warehouses broke through the 90.0 per cent level for the first time in Q3 07 while occupancy rate for factories showed gradual improvements during the year.

Mr Goh added that "the increase in rent and occupancy rates for factories and warehouses was due to better economic conditions in Singapore and Asia. The recent economic growth in Asia has been driven by the twin growth engines of China and India. As such, many international companies have turned their sights to this region. Singapore's strategic location and pro-business environment made the city-state a choice location for many companies."

In 2007, several upcoming business park developments were revealed. Ascendas announced that it would be developing a facility in Changi Business Park with Citibank as the main tenant. Ascendas will also be developing another facility in the International Business Park. The expected completion date for both facilities is 2009. United Engineers would be constructing the 72,500-sm (780,390- sf) Centric Singapore in Changi Business Park with projected completion date in 2011. At the same time, Singapore Science Park, managed by Ascendas, will be undergoing an extensive $400-million renovation which will be done in three phases over the next 10 years. The first phase will see two new developments with a total gross floor area of 86,600 sm (932,162 sf). In addition, tenders for Biopolis Phase 3 and Fusionopolis Phase 2B were launched in the year but the results have not yet been announced. If successfully awarded, the two developments can yield up to a total gross floor area of 91,776 sm (987,877 sf).

Also in the year, 10 industrial sites ($190.5 million) were awarded under the government land sales programme, up from seven sites ($86.9 million) in 2006. The most noteworthy tender was the 30-year leasehold Commonwealth Drive/Lane site which was awarded to WHB Pte Ltd in November for a record-high of $171 psf/plot ratio. The other nine sites fetched from $23 psf/plot ratio to $72 psf/plot ratio.

MI- REIT launched its IPO in April 2007 with an initial portfolio of 12 properties valued at some $316.2 million. After the launch, MI-REIT made eight purchases totalling $228.9 million. The REIT also made its maiden overseas purchase in Q4 07 when it bought a warehouse in Japan for $29.2 million.

MapletreeLog continued on its overseas expansion, snapping up 12 overseas properties for a total of $700.4 million. It bought only six properties in Singapore for $62.4 million. CIT bought 10 local properties for $209.3 million. A-REIT was less active in 2007 compared to 2006. In 2007, it bought only five properties for $81.7 million compared to seven properties for $182.7 million a year ago.

Rents and occupancy rates for all industrial space, especially hi-tech buildings and business & science parks, are expected to continue on a growth path in 2008. Manufacturing is still expected to be one of the key pillars of the Singapore economy and enjoys strong government support. The effects of the recent US sub prime woes might impact demand for industrial space in the short-medium term but overall, manufacturers are expected to continue investing in Singapore and so demand for industrial space will still remain healthy.