JTC foresees weaker demand

AFTER a record performance last year, JTC – Singapore’s biggest industrial landlord – expects demand for industrial space to weaken in line with slowing economic growth this year.

Operating income in fiscal year 2007 rose 5 per cent to $1.1 billion for the state-owned developer, due mainly to higher allocation of ready-built facilities and prepared industrial land.

Take-up of its net industrial land reached 360 hectares, the highest level in 10 years.

Total surplus grew 50 per cent from a year earlier to reach $1.2 billion.

“Last year’s performance was supported by a buoyant market, but industrial space demand rides on the economic cycle and we cannot expect to have a repeat for the records reached this year,” JTC chief executive Ow Foong Pheng said during a media briefing yesterday.

“Already commercial rents are softening, we’ll see how it goes,” said Mrs Ow.

Singapore’s economic growth is expected to slow this year, which could mean slower growth for industrial rentals.

JTC plans to sell “a handful” of ready-made facilities through a trade sale, after its $1.7-billion divestment of similar assets in June to a real estate joint venture between Mapletree Investments and Arcapita Bank.

While Mrs Ow declined to reveal their value, she said the remaining assets sold would be a “much smaller” proportion of what has been divested.

After the divestments, JTC will hold land as its primary asset. But it will retain some ready-made facilities for integration with surrounding estate as “longer term plans”, said Mrs Ow.

Recently, Prime Minister Lee Hsien Loong highlighted JTC’s evolving role as an innovative industrial developer. Some upcoming projects include building factories with higher plot ratios and the use of large floating structures out at sea for the storage of oil.

Source : Today – 30 Jul 2008

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