reporter2
17-04-14, 21:40
http://www.businesstimes.com.sg/archive/tuesday/premium/singapore/govt-raise-supply-shop-factory-space-next-3-years-20140415
Published April 15, 2014
YESTERDAY IN PARLIAMENT
Govt to raise supply of shop, factory space in next 3 years
This is to ensure enough supply for businesses planning for the long term
By Lee U-Wen
[email protected] @LeeUWenBT
THE government will make more factory and shop space available over the next three years to ensure there is enough supply for businesses as they plan for the long term.
Minister of State for Trade and Industry Teo Ser Luck said in Parliament yesterday that an average of 500,000 sq m of multiple-user factory space will come on-stream each year for the next three years.
This, he said, is nearly double the average annual demand for such space in the last three years, and is expected to moderate industrial rentals further.
Industrial rentals, he noted, remained largely stagnant from 2000 to 2006, before seeing an uptick in 2007 and then declining during the global financial crisis that followed.
In the second half of 2009, rentals started rising from a low base as the Singapore economy recovered.
Rentals, which have stabilised since last year, constitute between 3 and 7 per cent of business costs for small and medium-sized enterprises (SMEs) in the manufacturing sector, depending on the industry.
As for retail space, Mr Teo said that as retail leases are typically renewed every two to three years, tenants may have to pay more at the point of renewal.
He disclosed data from the January 2012 to May 2013 period, which found that the median increase in rentals upon renewal was in line with inflation.
One in 10 tenants experienced cumulative increases in rental of more than 50 per cent, and these were mainly those who renewed their leases after more than four years, or who had units in "more attractive" locations, said Mr Teo.
He also pointed out that about a quarter of tenants saw their rents remain the same or even decline during that period.
Mr Teo told the House that he expected retail rentals to moderate further. Over the next three years, about 145,000 sq m of new shop space will be completed each year, more than double the average annual demand for such space in the last three years.
For its part, the government has provided property tax rebates in the past to help reduce business costs during severe economic downturns, the last coming in 2009.
"In view that current economic conditions are sound and rentals expected to moderate, such rebates and subsidies are not necessary," said Mr Teo.
In response to Lee Bee Wah's (Nee Soon) question on whether the Trade and Industry Ministry could work with real estate investment trusts (Reits) to help SMEs manage rent in the long run, Mr Teo said Reits are "not leading players" in the rental space market.
Reits only own about 13 per cent and 16 per cent of retail and industrial rental spaces respectively, he said.
"Reits typically select properties in locations that are more attractive, and invest in asset enhancement as well as undertake marketing efforts to increase foot traffic," said Mr Teo.
"These factors help explain why Reits are able to charge higher rentals. Like any other landlord, they have to compete in the rental market to attract tenants."
Published April 15, 2014
YESTERDAY IN PARLIAMENT
Govt to raise supply of shop, factory space in next 3 years
This is to ensure enough supply for businesses planning for the long term
By Lee U-Wen
[email protected] @LeeUWenBT
THE government will make more factory and shop space available over the next three years to ensure there is enough supply for businesses as they plan for the long term.
Minister of State for Trade and Industry Teo Ser Luck said in Parliament yesterday that an average of 500,000 sq m of multiple-user factory space will come on-stream each year for the next three years.
This, he said, is nearly double the average annual demand for such space in the last three years, and is expected to moderate industrial rentals further.
Industrial rentals, he noted, remained largely stagnant from 2000 to 2006, before seeing an uptick in 2007 and then declining during the global financial crisis that followed.
In the second half of 2009, rentals started rising from a low base as the Singapore economy recovered.
Rentals, which have stabilised since last year, constitute between 3 and 7 per cent of business costs for small and medium-sized enterprises (SMEs) in the manufacturing sector, depending on the industry.
As for retail space, Mr Teo said that as retail leases are typically renewed every two to three years, tenants may have to pay more at the point of renewal.
He disclosed data from the January 2012 to May 2013 period, which found that the median increase in rentals upon renewal was in line with inflation.
One in 10 tenants experienced cumulative increases in rental of more than 50 per cent, and these were mainly those who renewed their leases after more than four years, or who had units in "more attractive" locations, said Mr Teo.
He also pointed out that about a quarter of tenants saw their rents remain the same or even decline during that period.
Mr Teo told the House that he expected retail rentals to moderate further. Over the next three years, about 145,000 sq m of new shop space will be completed each year, more than double the average annual demand for such space in the last three years.
For its part, the government has provided property tax rebates in the past to help reduce business costs during severe economic downturns, the last coming in 2009.
"In view that current economic conditions are sound and rentals expected to moderate, such rebates and subsidies are not necessary," said Mr Teo.
In response to Lee Bee Wah's (Nee Soon) question on whether the Trade and Industry Ministry could work with real estate investment trusts (Reits) to help SMEs manage rent in the long run, Mr Teo said Reits are "not leading players" in the rental space market.
Reits only own about 13 per cent and 16 per cent of retail and industrial rental spaces respectively, he said.
"Reits typically select properties in locations that are more attractive, and invest in asset enhancement as well as undertake marketing efforts to increase foot traffic," said Mr Teo.
"These factors help explain why Reits are able to charge higher rentals. Like any other landlord, they have to compete in the rental market to attract tenants."