Industrial properties investment sales could hit S$3b in 2007

Investment sales of industrial properties could set a new record of S$3 billion this year, said property consultants, easily outstripping last year’s record high of S$1.9 billion.

Analysts attribute the increase to more acquisitions by real estate investment trusts and an impending divestment by JTC.

JTC, Singapore’s largest industrial landlord, is expected to divest properties totalling some 1.7 million square metres through a REIT and trade sales later this year.

The deal includes JTC’s flatted factories, business park buildings and a warehouse.

At the same time, other industrial REITs are also looking to boost their portfolios.

Tay Huey Ying, Director of Research, Colliers International, said: “The industrial REITs are seen to be continuing with acquisitions to grow their portfolio. Moreover, we are also seeing the listing of more REITs, for example, the recently-listed MacArthur Cook Industrial REIT.

“The impending divestment of JTC’s ready-built facilities will also boost the investment sales figures in 2007 so we are likely to see a higher volume compared to last year.”

Market watchers said there is a growing trend of companies selling their buildings and then leasing back the space.

This will help to boost activity in the sector.

Lim Kien Kim, Director (Industrial), Knight Frank, said: “These companies generally have property sizes that are in excess of 100,000 square foot gross floor area, usually worth more than S$10 million, and with land tenure in excess of 40 years. These are key components which will interest the REITs.”

Property consultants also note that the entry of foreign funds from countries like Australia and the Middle East has added more fuel to the mix.

Mr Lim said: “These funds are basically looking at industrial properties that they can enhance. The enhancements will lead to better rental yields and possibly an increase in capital values, which they may then sell off later.”

Foreign funds have already bought into offices such as Temasek Tower and apartments like Horizon Towers this year.  

Source: Channel NewsAsia, 07 May 2007

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