Weak output sweep Singapore: Singapore PMI hits more than 2 year low

A string of poor PMI figures hit Asia on Monday. Singapore was no exception. Its PMI (purchasing manager's indices) - a barometer of industrial activity - fell to a more than two year low of 49.4 indicating a fifth month of industrial contraction. The declines were in both local and abroad orders. Production output fell together with stocks of finished goods. Employment continued to fall. South Korea fell too. Both India and Taiwan slipped. Currently, the transport engineering - and in particular, marine and offshore engineering are likely to remain weak in the coming months. This is also seen in the electronics sector. On a related note, China's April HSBC PMI hits lowest in a year.
 

Lower than expected rental yields put off potential buyers

An over supply of strata industrial units is hitting sales and sending rents down. They were marketed at high rental expectations. But word is out that most are struggling to get even $1.80 psf per month in rent. Some were even below $1 psf. This translates to rental yield below 3 percent. Estimated occupancy in most of the new projects is 50 to 60 percent with Business 2 projects faring better than Business 1 projects. Business 1 developments are suitable for lighter industries compared with Business 2 projects. Vacancy rates are likely to trend upwards this year, possibly hitting 15.5 percent at the end of the year. Sales are slow. A project UB One - completed in 2011- had a unit, which took six months to sell, had the asking price trimmed about $50 per square fit. This weakness stemmed from weak buying demand, rising interest rates and softening rents.