Fewer strata-titled industrial sites for sale

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http://www.straitstimes.com/archive/wednesday/premium/money/story/fewer-strata-titled-industrial-sites-sale-20141231

Fewer strata-titled industrial sites for sale

Govt trims supply for first half of 2015 with large projects under way

Published on Dec 31, 2014 1:28 AM

By Cheryl Ong


TWO industrial sites that can be used to build strata-titled units have been put on the confirmed list for sale in the first half of next year - one fewer than the allocation in this six-month period.

The move is part of an ongoing government strategy to taper the supply of industrial space.

The two sites listed yesterday under the Industrial Government Land Sales Programme can be sub-divided so the winning bidder can sell smaller units or custom-build its own facilities.

Consultants applauded the move to cut the number of such sites, citing a looming supply of strata units in the pipeline. There are about 10 large industrial projects under construction, with a total gross floor area of 5.39 million sq ft from sites sold this year.

About 44.2 million sq ft of factory space is slated for completion by the end of next year, said the Urban Redevelopment Authority.

"This should bring some relief to developers of industrial projects with a significant number of unsold strata units," said Mr Nicholas Mak, research head at property firm SLP International.

The Ministry of Trade and Industry (MTI) rolled out nine confirmed list sites yesterday with a total area of 6.46ha. They will go on sale in the first half of next year regardless of interest from developers. This is down from the 12.06ha placed on the industrial land sales programme in the second half of this year. Demand in this segment slowed after stamp duties were slapped on sellers last year to discourage speculative trading of industrial properties.

Eight of the nine confirmed sites are zoned Business-2, which allows heavy industrial use, and have leases of 20 years, the shortest for such sites. These parcels are likely to draw industrialists who have been calling for more space to expand and develop their production facilities, said experts.

The ninth site is earmarked for light and clean industrial use.

A 1.37ha plot in Woodlands Avenue 10 and a 0.6ha parcel in Ubi Avenue 1 - both on the confirmed list - are targeted for a possible "multiple-user development".

The 20-year leasehold Woodlands site is the second parcel with a sizeable area and short lease to be released, following a 1.63ha site in Penjuru Road snapped up by logistics and warehousing firm UBTS for $9.3 million last Wednesday.

The confirmed list also includes three plots in Tampines Industrial Drive. Construction firm Lian Beng's successful bid for a nearby site at $64.4 million - or $87.34 per sq ft per plot ratio - last month indicates the demand in the area.

Mr Mak said industrialists from the wafer fabrication and semiconductor industries are likely to be drawn to the area. Each site can yield 71,042 to 87,188 sq ft of gross floor area.

If the five plots from the reserve list announced yesterday are included, 14.04ha of industrial land are potentially up for grabs. Sites on the reserve list go on sale only if an acceptable minimum bid is submitted.

Separately, the MTI said buyers of industrial sites launched from Jan 1 will not have to build a goods lift and loading bay if the site is a "full ramp-up development" - industrial buildings that allow vehicles direct access to units on each floor. But other multi-storey industrial buildings with four storeys or more must have a service lift designated for goods.

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http://www.businesstimes.com.sg/real-estate/government-trims-confirmed-list-industrial-land-sales-for-h1-2015

Government trims confirmed-list industrial land sales for H1 2015

Industrial property market stabilising from land releases between 2010 and 2014: major completions expected in the next two years

By Lee Meixian

[email protected]@LeeMeixianBT

31 Dec


THE Ministry of Trade and Industry (MTI) continues to taper industrial government land sales under the confirmed list for the next half-year, as the industrial property market shows signs of stabilising (see infographic).

It will offer nine sites totalling just 6.46 hectares (ha) on the confirmed list. This is about half the approximate 12 ha of state land it released in each of the six-month periods in 2014. It is also the lowest half-yearly quantum on the confirmed list since H1 2011.

Asked for the rationale behind the land-supply taper, MTI said it had already released significantly more land between 2010 and 2014 - an average of 42 ha per year including reserve list sites, compared to around 32 ha from 2005 to 2009.

This was done to moderate prices and rentals, which had risen by around 16 per cent and 8 per cent per annum respectively in the last four years.

Going by the latest Q3 statistics, the ministry's strategy has worked.

In addition, 2.6 million square metres of industrial space is expected to be ready in 2015; another 1.9 million sq m will become available in 2016.

R'ST Research director Ong Kah Seng said: "This is a calibrated move by the government to mitigate a risk of oversupply in industrial properties in future."

Knight Frank executive director (industrial) Lim Kien Kim called it a "measured move", given the uncertain economic outlook going into 2015.

The latest weak manufacturing figures in November have led economists to predict that full-year GDP growth will come in at below the government's projection of "around 3 per cent".

Transactions of factory space halved in 2014, both in value and volume, on the back of seller stamp duties, loan curbs and poorer demand from manufacturers struggling with high labour costs.

Analysts noted that, among the land parcels released this time, there is little opportunity for strata development, which makes for good news for developers with many vacant and unsold strata industrial units.

Knight Frank's Mr Lim said: "The reason is probably due to the current abundant supply of strata industrial units in the primary and secondary market. We should thus see more interest in current projects and the secondary market, thereby reducing the total vacancy in the market."

SLP International executive director Nicholas Mak said that a huge supply of strata-titled industrial developments - 10 large projects with a total gross floor area of 500,900 sq m - could be launched in the next two years.

There has also been a continued release of sites under one hectare and with shorter tenures under the government's drive to make it more affordable for end-users to bid for land and build their own production facilities.

The shorter tenure is designed to weed out speculative traders, who would not want to struggle to resell a property with so few years left on the lease. Eight of the nine confirmed-list sites for the next half-year have 20-year leaseholds.

All but one plot on the list are zoned B2, for heavier industrial use; only one site in Ubi Ave 1 is zoned B1.

Coming after a hiatus of B1 sites in H2 2014, Mr Ong said this was probably done to avoid a severe shortage of B1 space down the road, amid a proliferation of completed B2 space.

"That would have led to major increases in rents and prices of B1-use factory space," he said.

This round, MTI actually boosted its reserve-list land supply to 7.62 ha, from 6.81 ha previously.

Confirmed list sites are launched according to schedule, whereas reserve list sites are launched when developers offer a minimum price that the government deems acceptable.

Mr Ong said this is expected. "When confirmed list sites have been trimmed, reserve list sites become an alternative for industrialists. In case there is slightly higher demand for land, the authorities will leave it to the developers to trigger the reserve list sites."