It moves up from 12th place due to rents falling in some European countries
Cushman & Wakefield Singapore managing director Donald Han said: 'Singapore's rise up the world ranking is partly due to countries which used to be more costly moving down. In terms of rental growth, Singapore remained stable in 2008.
'However, with Singapore being an export-reliant economy, we expect demand for industrial space to be reduced significantly in the next 12 months, leading to a fall in rental rates. We are already experiencing a huge fall-off in non-oil domestic exports to the USA and China in the first month of 2009 - about 50 per cent contraction in both markets.'
Cushman's data showed that Singapore posted zero growth in industrial property rent in local currency terms last year.
It noted that the industrial property market started 2008 as the best performing sector in the wider property market within Singapore.
'However, the slowdown with the closely linked US economy started the deterioration of the domestic economy and by the end of the year, the market had slowed significantly.
'With rents falling in the final quarter of the year, the rental growth seen in the first quarter virtually disappeared by the end of the year,' the report noted.
Occupancy of industrial property deteriorated throughout the world in all but a handful of markets in 2008 and global rental growth slowed to 2.4 per cent, down from 6.1 per cent in 2007.
The more mature markets of North America and Western Europe were the first to underperform early in 2008 but by the year's end, all regions of the world had been affected by the global economic downturn, Cushman said.
Industrial commercial property markets in Central and Eastern Europe (CEE) and South America were the best performing globally in 2008. Annual rental growth in CEE was 6.7 per cent in 2008, almost the same level as in 2007. The Polish and Ukrainian markets were both very active over the year, for example, with considerable demand for a relative shortage of quality accommodation.
Rents increased in Poland by 28 per cent and in Kiev, Ukraine, by 25 per cent.
In South America, industrial rents rose by 12.4 per cent over the year with the Rio de Janeiro, Brazil, market recording the highest global rise in rents of 46 per cent.
Most Western European countries saw rents hold firm in 2008 as occupier demand steadily declined over the year.
'In fact, the global downturn in rents is really demand-led, as many industrial markets remain undersupplied in terms of modern space.
'Falling take-up is a trend evident across most global industrial markets and one that is expected to continue well into 2009,' Cushman said.
Source: Business Times, 17 Mar 2009