Tag Archives: Singapore Industrial

Effects of cooling measures on industrial properties beginning to show

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The first quarter of the year is traditionally a quiet period for the industrial property market. However, market sentiment seems a little different this year.

Data from Knight Frank shows that sales volume of strata-titled factory space in the first quarter this year is 26.5 per cent lower than the same period last year.

Knight Frank’s latest report analysed caveats lodged up till March 15.

Despite the sharp drop in demand from the fourth quarter of 2012, prices of new factory spaces fell only moderately. Prices for 30-year leasehold factory units fell by 4.2 per cent and those with 99-year leasehold declined 1.6 per cent. Prices fell four per cent for a 60-year lease hold unit and 3.5 per cent for a freehold unit.

This is despite the government imposing Sellers’ Stamp Duty of 15 per cent on properties sold within the first year of purchase.

Alice Tan, senior manager at Knight Frank, said: “We see that price trends generally would exhibit a laggard effect to regulations and measures. So once the prices start take effect due to cooling measures, which would happen over the next two quarters, hopefully the government will not launch any more cooling measures.”

Other market watchers like Savills Singapore are forecasting industrial property prices — which is made up of 70 per cent factory space and 30 per cent warehouse — to decline by 10 to 15 per cent this year.

According to Knight Frank, rentals of factory space have increased by five per cent in Q1 2013 from Q4 2012 to S$2.13 per square foot islandwide.

Knight Frank noted that the newer strata-titled factory spaces have commanded higher rentals, but with 24 million square feet of new supply coming up in the remaining 2013, rental increase is likely to be capped.

While more tenants may be interested in newer spaces, those with tighter rental budgets may go for older buildings — should the rental difference between the newer and older space widen further — where rents have slipped by 10 to 15 per cent, depending on location.

Dominic Peters, who is the industrial real estate director for Savills, said: “In locations where there are a great demand that outbids supply — Woodlands, Kaki Bukit, Ubi — there will be a drop in rentals as expected. In locations like Lavendar, Henderson areas, where it is out of CBD, I think rentals will still hold or maybe ease a bit in the next quarter.”

According to the URA Price Index, industrial property rentals rose 3.9 per cent in the fourth quarter of 2012 from the preceding quarter, outstripping the 1.2 per cent quarter-on-quarter rise in July through September.

URA is expected to release final first quarter property data on April 26.

Source : Channel NewsAsia – 8 Apr 2013

JTC to sell Loyang Way industrial land site by public tender

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JTC Corporation (JTC) has launched the sale of a plot of industrial land at Loyang Way by public tender on Thursday.

JTC said the site has a land area of 20,633 square metres, and is zoned for Business-2 development. This means the plot can be used for industry and warehouse purposes.

The land parcel has a tenure of 30 years and gross plot ratio of 2.5.

Developers have up to 84 months to complete projects on the site.

The tender closes on May 9, 2013, at 11:00am.

Source : Channel NewsAsia – 28 Mar 2013

Industrial property at Enterprise Rd up for sale by tender

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An industrial property at Enterprise Road in Jurong has been put for sale by tender.

The asset consists a large single-storey factory – comprising warehouses, production and office areas.

Exclusive agent for the deal Jones Lang LaSalle said the site has a built up area of about 62,500 square feet.

It is located on a leasehold site of 109,164 square feet with a remaining term of 25 years.

Meanwhile, the site has a “Business 2″ zoning and a plot ratio of 2.5

The development is located near Boon Lay and Joo Koon MRT stations.

Local Director of Investments at Jones Lang LaSalle, Nicholas Ng, said it expects strong response for the site, thanks to “increasing demand from industrialists and limited supply of large industrial land for sale in the Enterprise Road area”.

He added that the capacity of the asset to be refurbished and potentially boost the gross floor area to maximise the plot ratio will make it attractive to small and medium enterprises or corporates who are seeking to “expand their business or their headquarters in an area where there is excellent accessibility and infrastructure, with good access to the workforce from the surrounding housing estates”.

The tender will close at 3pm on 30 April 2013.

Source : Channel NewsAsia – 19 Mar 2013

Most experts see industrial property prices to continue rising

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It’s all quiet on the industrial property front more than a week after Singapore’s first cooling measure on the sector kicked in.

Most market experts are confident that industrial property prices will hold steady and may even increase by up to 15 per cent this year.

But there’re others who believe the sector is set for a correction.

For the first time, Singapore is imposing a Sellers’ Stamp Duty on industrial property purchases. Properties sold within the first year will be levied 15 per cent; 10 per cent in the second year and 5 per cent in the third year.

The latest cooling measures on industrial properties came about as speculative activity shot up last year.

Industrial property prices have doubled over the last three years, outpacing rent increases.

Last year alone, industrial property prices in the third quarter was almost a third higher than in the beginning of 2012, according to the Urban Redevelopment Authority’s industrial property price index.

Experts said unlike the Additional Buyers’ Stamp duty on residential properties, the Sellers’ Stamp Duty will not apply if a property is sold from the fourth year. There’s also no additional cost immediately after buyers sign on the dotted line.

PropNex’s senior group district directo, David Poh, said: “The government only wants to wipe off speculators but not the investors. Since there is no increase in cost to industrial investments, you will probably see one or two months of digestion period. This year’s increase won’t be as strong as last year’s – 20 over, 30 per cent. But in the range of 10-15 per cent, I think it is about there. The industrial segment is still supported by very strong investment demand.

DWG’s senior research manager, Lee Sze Teck, said: “Property will remain in the positive territory, remaining in the positive territory this year, probably 5 per cent.”

But some experts believe Singapore’s slowing economy could hit industrial property prices.

Savills’ industrial real estate director, Dominic Peters, said: “Prior to these measures, there is already a huge over supply in industrial strata units – in many areas like Woodlands, Kaki Bukit, Ubi, Yishun. So with these measures, definitely it will impact the market. I see a downward trend say 15-20 per cent in 2013, 2014.

New land supply released by the government for industrial use could also dampen industrial property prices and rental.

Last year, cash-rich investors lured by higher returns from industrial property pushed the number of industrial property transactions to a record high of 3,460 – 77 per cent higher than in 2011, according to data from Colliers.

Source : Channel NewsAsia – 22 Jan 2013

Guang Ming Industrial Building at Paya Lebar up for collective sale

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Guang Ming Industrial Building, located at No 65 Upper Paya Lebar Road, has been put up for collective sale.

The freehold industrial ‘white site’ has a land area of 19,789 square feet.

Its marketing agent Cushman & Wakefield says the site is expected to fetch more than S$58 million.

Among the likely interested parties for the site include small to mid-sized developers and those companies looking for a site to locate their corporate headquarters, adds Cushman and Wakefield.

Developers can build up to a gross floor area of some 70,000 sq ft, including some 20,000 sq ft of retail and commercial space.

This is based on a maximum allowable plot ratio of 3.5.

Cushman & Wakefield’s Director of Investment Sales Christina Sim says prime locations like Tai Seng and Paya Lebar will make the building a “hot commodity”.

She adds that “the special ‘white zoning’ of the site will give an added boost to its development potential.

The tender will close on 5 February 2013.

Source : Channel NewsAsia – 3 Jan 2013

URA releases sales conditions for Woodlands industrial site

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The Urban Redevelopment Authority (URA) has released detailed sales conditions for an industrial site at Woodlands Avenue 12.

URA said in a statement on Friday that the land parcel is released for sale under the Reserve List of the second half of this 2012′s Government Industrial Land Sales programme.

The 30-year leasehold plot has a site area of about 3.9 hectares and a maximum permissible gross plot ratio of 2.5.

URA said the site is to be developed for Business 1 use, such as for the light industry, clean industry, utilities or telecommunications.

Source : Channel NewsAsia – 28 Dec 2012

JTC tenders for Jurong Rock Caverns operator

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JTC Corporation launched the second stage of its two-stage tender on Thursday to engage an operator for Jurong Rock Caverns (JRC), Singapore’s first underground hydrocarbon storage facility.

JTC said in a statement that phase one of the project on Jurong Island, which comprises five caverns, will be completed in stages between 2013 and 2014. It aims to appoint an operator by mid-2013, which will be given a 15-year contract.

In the second stage of the tender, qualified participants will have to submit proposals which will be evaluated based on individual merits, with an emphasis on the fee as well as technical, commercial and legal propositions.

To ensure rigour in the selection process for a capable and qualified operator, JTC said the second stage will also include a pre-qualification stage for new interested participants who had missed the first stage.

The pre-qualification stage, which opens on Thursday, will close on 21 January 2013.

JTC added that four participants who were shortlisted under the first stage have been invited to submit their proposals for evaluation in the second stage. These participants were evaluated based on criteria such as financial stability, experience, capability and track record.

JTC’s assistant chief executive officer David Tan said: “JRC will cater to the growing need for additional storage capacity for liquid hydrocarbons at Jurong Island.

“The project will help to optimise our land resource and ensure the competitiveness and sustainability of Singapore’s chemical industry in the long run.”

The Jurong Rock Caverns project is the first underground rock cavern for hydrocarbon storage in Singapore and Southeast Asia.

Located at a depth of 130 metres beneath Selat Banyan at Jurong Island, it is expected to provide infrastructural support to manufacturers on Jurong Island, and meet the storage needs for liquid hydrocarbons such as crude oil, condensate, naphtha and gas oil.

Source : Channel NewsAsia – 27 Dec 2012

Industrial property prices to continue to climb in 2013, say analysts

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Prices of industrial properties in Singapore have risen by some 27 per cent in the first three quarters of 2012.

Some analysts say prices could climb by 30 per cent for the entire year, one of the highest in recent years. They attribute the increase to buoyant demand for strata-titled industrial premises.

Low interest rates, high liquidity and cooling measures in the residential property segment have further fuelled demand.

The Singapore government has set aside 24.84 hectares of industrial land for the first half of 2013. They will also require developers to build a minimum number of large factory units for selected plots under the Industrial Government Land Sales Programme.

Some market watchers however say the upward price trend is likely to continue in 2013.

“Prices are at an all-time high now. Compared to the 1997 peak, we are about 14.9 per cent higher, and compared to the most recent peak in 2008, we are now at more than 59.3 per cent higher,” said Chia Siew Chuin, director of research and advisory at Colliers International.

“At the same time, buyers are also more resistant now in terms of pricing especially within such uncertain economic conditions,” added Ms Chia.

The government cut lease terms for industrial sites from 60 to 30 years earlier this year in a bid to make industrial land more affordable.

However some analysts say the move has had a limited impact.

“We can expect more policy measures affecting the industrial market next year. If that transpires, we will see a flattening out in terms of industrial land price demand… (However) we will still be looking at an uptick (of) not more than 10 per cent,” said Donald Han, a special advisor at HSR.

Analysts also expect rentals for industrial properties to fall in the coming year, in view of some 8 million square feet of business and industrial parks that is due to be completed in the next 16 months.

“The substantial supply that is coming in both high tech space as well as conventional industrial spaces will likely help keep rental growth in check going forward,” said Chua Yang Liang, head of research at Jones Lang LaSalle.

“Capital value is a very different ball game now; it may see some stronger growth compared to rental,” added Mr Chua.

Market watchers have also said that they expect rentals in the office property segment to dip by 5 per cent in 2013.

Analysts however say the decline will be mitigated by rising demand for office space in the central business district, especially from companies outside the financial services sector. These include law firms as well as a variety of consultancy firms.

However, with the uncertain economic outlook next year, analysts say a supply overhang could be a rising concern.

They expect some 4 million square feet of new office space to be available in the next two years.

Source : Channel NewsAsia – 26 Dec 2012

Requirement for successful bidders of certain industrial sites

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The Singapore government has set aside nearly 25 hectares of industrial land for the first half of 2013, according to the Industrial Government Land Sales Programme (GLS) released by the Ministry of Trade & Industry (MTI) on Wednesday.

A new regulation by the government now requires developers to build a minimum number of large factory units. This applies to four large land plots with a site area of between 1.8 and 3.9 hectares.

Experts said this will put a lid on rising land prices by discouraging the development of multiple small factory units.

For now, this applies to four large land sites in Buroh Crescent, Tuas Bay Drive, Loyang Way and Tuas South Avenue 3.

Experts believe this will prevent aggressive bidding and “moderate” industrial land prices in 2013.

According to the Urban Redevelopment Authority (URA), for the first nine months of this year, industrial land prices rose by 27 per cent.

Rents too, rose 6 per cent over the same period.

SLP International’s executive director of research & consultancy Nicholas Mak said: “I think that with some of the development conditions that will be attached to some of these industrial land sites, (it) may not really reverse the trend in industrial prices, but it will certainly discourage some of the more “non-traditional” industrial developers from tendering for such sites and it will also be able to help the creation of more suitable industrial space that will be preferred by genuine industrialists and manufacturers.”

The MTI added that the regulations are meant to help small and medium enterprises (SMEs) that require larger industrial spaces.

But not everyone is convinced that this move is enough.

Dennis Wee Group said this is still a cautious outlook, given the fewer number of sites launched for the first half of 2013, compared to the second half of this year where there were 16 industrial sites on the confirmed list and three sites on the reserve list, with a total of 23.72 hectares.

Dennis Wee Group Realty’s senior manager of research & consultancy Lee Sze Teck said: “If you were to look at the number of sites that are being offered in 2013 in the GLS programme, the number of sites on the 22-year lease is actually lesser than what we see in the second half of 2012. On the other hand, the government placed some of these 22 year sites on the reserve list, soif the government is looking at lowering costs, then they should actually offer more sites and choices for SMEs to participate in bidding for these sites, instead of putting some of these sites on the reserve list and letting the SMEs trigger the sites for sale.”

This is not the first time such measures are introduced in the industrial land market.

In June this year, the government shortened the maximum tenure for industrial land from 60 to 30 years to allow SMEs to submit lower bids for the land sites and lower their upfront costs.

Source : Channel NewsAsia – 19 Dec 2012

S$200m logistics hub breaks ground at Jurong West

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A S$200 million logistics hub broke ground at Jurong West on Friday.

Named Supply Chain City, the facility is the brainchild of logistics firm YCH.

Apart from serving as its headquarters, the facility will also cater to other companies needing logistics space.

YCH is transforming a 6.5-hectare area in western Singapore to build its new home come 2014.

It will house a five-storey warehouse, a first-of-its-kind automated material handling system and eight floors of offices.

Supply Chain City is going to be a modern hub that rivals YCH’s facilities in India and China.

This is in anticipation of booming demand for logistics and creating an ecosystem for the industry.

Robert Yap, chairman and CEO of YCH Group, said: “The community will include even the other logistics players and also the logistics or supply chain experts from all our customers.

“We hope that Supply Chain City will be where all the next generation, the new supply chain innovations come from.”

Singapore’s logistics and transport sector employs more than 200,000 workers and is facing a serious labour crunch.

Some S$42 million has been set aside by the government for the sector, through the National Productivity and Continuing Education Council (NPCEC), to raise its productivity and improve training.

To date, around 50 logistics companies have benefited from the roll-out of the five-year productivity roadmap, since March this year.

Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam, said: “There will be more strong logistics companies including…very small players that we are now nurturing through SPRING and IE Singapore. And the government is ready to support your growth and aspirations in this next phase of our economic development.”

Experts have said big brands in the West are moving their warehousing and distribution to bring products closer to regional markets.

As Asia remains a centre for manufacturing, more companies will likely continue heading East.

Source : Channel NewsAsia – 7 Dec 2012