Industrial Government Land Sales programme for second half of 2013 launched

The Singapore government has set aside about 22.84 hectares of industrial land for the second half of this year.

The Trade and Industry Ministry has placed a total of 22 sites under its Industrial Government Land Sales Programme.

Analysts said medium-sized firms are most likely to benefit from this pipeline of land supply, which consist mostly of small sites with a shorter tenure.

The government has put 19 industrial sites on the Confirmed List, with the majority of the sites located in Tuas South.

Market watchers said this is the highest number of industrial Confirmed List sites in the past three IGLS programmes.

Among them, 14 sites are being offered on a 21-year tenure, with the rest on a 30-year lease.

Last year, the government shortened the maximum tenure for industrial land down from 60 years to make sites more affordable to SMEs.

This will enable firms to submit lower bids for the land sites and lower their upfront costs.

MTI will also introduce two new sites on the Reserve List, they include sites at Tuas Bay Close and Gambas Crescent. The third site is located at Woodlands Avenue 12, which is carried over from the first half of the year.

Ku Swee Yong, CEO at International Property Advisor, said: “These bids will be serious bids for their own use, rather than with a mind to build up something, get it fully tenanted and 10 years later sell the place. It is not so much for investment. In that case speculative investment activity will be out because the owner-occupiers will be bidding at a price that their business can sustain. There are very few banks that want to finance the new buyer into buying a piece of property with less than 15 years’ lease left.”

Some analysts said the smaller plots and shorter tenure will go some way to keep prices in check.

Last year, industrial property prices rose by 24.5 per cent and this year, analysts said prices will increase at a slower pace.

Analysts added that there is a better mix of sites on offer in the second half of the year, as well as more of the smaller sites under one hectare which are suitable for medium-sized firms looking to acquire their own premises.

Nicholas Mak, executive director at SLP International Property Consultants, said: “The one at Tai Seng (Street) is going to attract the most amount of attention, but I think the government would also be putting certain restrictions on it. For example, there could be a 10-year no-strata sales restriction and I think such restriction should be in place to discourage certain developers from just building it, perhaps building very small strata units, even developments with swimming pools and gymnasium which are unnecessary frills.”

Analysts said the 19 industrial sites on the Confirmed List could yield 242,000 square metres of maximum gross floor area. That is down by about 14 percent (283,000 square metres) from the first half of the year.

In the first half of 2013, the government put up 13 industrial sites on the Confirmed List and nine sites on the Reserve List.

Under the Reserve List system, a site will only be put up for tender if the minimum bid price submitted by the interested party is acceptable to the government and if there is sufficient market interest in the site.

Source : Channel NewsAsia – 19 June 2013

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