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23-12-13, 15:37
http://www.businesstimes.com.sg/archive/tuesday/premium/top-stories/industrial-gls-h1-2014-shows-tapering-20131217
Published December 17, 2013
GOVERNMENT LAND SALES
Industrial GLS for H1 2014 shows tapering
12.07 hectares in confirmed list is lowest half-yearly quantum in 2 years
By Kalpana Rashiwala [email protected]
[SINGAPORE] The Ministry of Trade and Industry (MTI) appears to be tapering industrial government land sales under the confirmed list for the next half-year as the industrial property market shows signs of stabilising following a run-up in the past few years.
It will be offering eight sites totalling 12.07 hectares of land for sale under the confirmed list of the Industrial Government Land Sales Programme for the first half of 2014. This is the lowest half-yearly land quantum for the confirmed list in the past two years. In the current H2 2013 slate, the government is releasing 14.52 ha on the confirmed list, and in H1 this year, the figure was 15.27 ha.
In H2 and H1 2012, the figures were 17.35 ha and 15.91 ha respectively.
Looking at the figures on a yearly basis, MTI released 33 ha in 2012 and 30 ha this year on the confirmed list - in the face of a substantial increase in industrial property prices.
However, with this market segment starting to stabilise - following the introduction in January this year of a seller's stamp duty to discourage short-term speculative trading of industrial properties as well as the rollout of the total debt servicing ratio (TDSR) framework in late-June, it makes sense for MTI to start tapering supply on the Industrial GLS Programme, say market watchers.
This is especially noteworthy given the substantial pipeline of industrial space. Some 47.6 million square foot gross floor area (GFA) of factory space is slated for completion by end-2016, based on Urban Redevelopment Authority's data as at end-Q3.
According to SLP International executive director Nicholas Mak, the potential GFA that can be developed from the confirmed list for H1 2014 will be 234,000 square metres (2.5 million sq ft) - 10.7 per cent lower than the current half year.
However, while MTI seems to be clipping industrial land supply on the confirmed list - where sites are launched according to a pre-stated schedule - it is holding supply steady on the reserve list. The government launches reserve-list sites only upon successful application by bidders.
The five reserve-list sites for H1 2014 add up to 8.35 ha, which is similar to the 8.32 ha for the current half year.
Half of the eight confirmed list sites in MTI's latest slate comprise relatively small plots (under one hectare each) on short tenure (21 years) in Tuas South, typically targeted at end-user industrialists keen on building their own customised facilities. The other four have 30-year leases and comprise a 0.9-ha site in Tuas Avenue 11, a 2.57-ha site in Tuas South and two plots in Woodlands Avenue 12 and Gambas Crescent. The last two will be transferred from the current H2 2013 reserve list.
Knight Frank executive director (industrial) Lim Kien Kim noted that while the total hectarage of confirmed list sites for H1 2014 will be lower, the average land size of the Tuas South plots targeted at end-users has been increasing in response to market demand. "A lot of the demand for smaller plots in the area appears to have been satisfied but users seeking bigger plots in the past needed to bid for two adjoining sites which may be hard to come by."
Mr Lim added that he was surprised that MTI had included in the confirmed list the Woodlands and Gambas Crescent sites, both zoned for Business 1 use and targeted at developers, given the weak demand for strata industrial properties post TDSR.
"Currently, in the vicinity of these two sites, there are projects with unsold units. Further supply of strata units can be expected in Gambas Crescent from the three sites sold this year to Far East Organization," he said.
"Perhaps the authorities moved the two sites to the confirmed list to supplement industrial activity for the proposed North Coast Innovation Corridor."
The H1 2014 reserve list will include a 2.72-ha site in Tuas Bay Close that will be rolled over from the current reserve slate, and four new sites in Tuas South. Three are 21-year plots with land areas of 0.5, 0.8 and one ha, while the fourth is a bigger plot of 3.33 ha and with 30-year leasehold tenure.
Mr Lim said the Tuas Bay Close site will be "an interesting one to watch as it will appeal not only to developers but also end-user industrialists in the oil and gas, marine and logistics sectors".
In its announcement yesterday, MTI also said that JTC Corporation, as the main government agency overseeing the industrial property market, will take over the land sales agent role from URA for all new sites under the Industrial GLS Programme from H1 2014. However, URA will remain land sales agent for the Woodlands and Gambas Crescent sites that are being moved to the confirmed list.
Published December 17, 2013
GOVERNMENT LAND SALES
Industrial GLS for H1 2014 shows tapering
12.07 hectares in confirmed list is lowest half-yearly quantum in 2 years
By Kalpana Rashiwala [email protected]
[SINGAPORE] The Ministry of Trade and Industry (MTI) appears to be tapering industrial government land sales under the confirmed list for the next half-year as the industrial property market shows signs of stabilising following a run-up in the past few years.
It will be offering eight sites totalling 12.07 hectares of land for sale under the confirmed list of the Industrial Government Land Sales Programme for the first half of 2014. This is the lowest half-yearly land quantum for the confirmed list in the past two years. In the current H2 2013 slate, the government is releasing 14.52 ha on the confirmed list, and in H1 this year, the figure was 15.27 ha.
In H2 and H1 2012, the figures were 17.35 ha and 15.91 ha respectively.
Looking at the figures on a yearly basis, MTI released 33 ha in 2012 and 30 ha this year on the confirmed list - in the face of a substantial increase in industrial property prices.
However, with this market segment starting to stabilise - following the introduction in January this year of a seller's stamp duty to discourage short-term speculative trading of industrial properties as well as the rollout of the total debt servicing ratio (TDSR) framework in late-June, it makes sense for MTI to start tapering supply on the Industrial GLS Programme, say market watchers.
This is especially noteworthy given the substantial pipeline of industrial space. Some 47.6 million square foot gross floor area (GFA) of factory space is slated for completion by end-2016, based on Urban Redevelopment Authority's data as at end-Q3.
According to SLP International executive director Nicholas Mak, the potential GFA that can be developed from the confirmed list for H1 2014 will be 234,000 square metres (2.5 million sq ft) - 10.7 per cent lower than the current half year.
However, while MTI seems to be clipping industrial land supply on the confirmed list - where sites are launched according to a pre-stated schedule - it is holding supply steady on the reserve list. The government launches reserve-list sites only upon successful application by bidders.
The five reserve-list sites for H1 2014 add up to 8.35 ha, which is similar to the 8.32 ha for the current half year.
Half of the eight confirmed list sites in MTI's latest slate comprise relatively small plots (under one hectare each) on short tenure (21 years) in Tuas South, typically targeted at end-user industrialists keen on building their own customised facilities. The other four have 30-year leases and comprise a 0.9-ha site in Tuas Avenue 11, a 2.57-ha site in Tuas South and two plots in Woodlands Avenue 12 and Gambas Crescent. The last two will be transferred from the current H2 2013 reserve list.
Knight Frank executive director (industrial) Lim Kien Kim noted that while the total hectarage of confirmed list sites for H1 2014 will be lower, the average land size of the Tuas South plots targeted at end-users has been increasing in response to market demand. "A lot of the demand for smaller plots in the area appears to have been satisfied but users seeking bigger plots in the past needed to bid for two adjoining sites which may be hard to come by."
Mr Lim added that he was surprised that MTI had included in the confirmed list the Woodlands and Gambas Crescent sites, both zoned for Business 1 use and targeted at developers, given the weak demand for strata industrial properties post TDSR.
"Currently, in the vicinity of these two sites, there are projects with unsold units. Further supply of strata units can be expected in Gambas Crescent from the three sites sold this year to Far East Organization," he said.
"Perhaps the authorities moved the two sites to the confirmed list to supplement industrial activity for the proposed North Coast Innovation Corridor."
The H1 2014 reserve list will include a 2.72-ha site in Tuas Bay Close that will be rolled over from the current reserve slate, and four new sites in Tuas South. Three are 21-year plots with land areas of 0.5, 0.8 and one ha, while the fourth is a bigger plot of 3.33 ha and with 30-year leasehold tenure.
Mr Lim said the Tuas Bay Close site will be "an interesting one to watch as it will appeal not only to developers but also end-user industrialists in the oil and gas, marine and logistics sectors".
In its announcement yesterday, MTI also said that JTC Corporation, as the main government agency overseeing the industrial property market, will take over the land sales agent role from URA for all new sites under the Industrial GLS Programme from H1 2014. However, URA will remain land sales agent for the Woodlands and Gambas Crescent sites that are being moved to the confirmed list.