Tai Seng industrial area hots up with MRT's arrival

Major firms have offices there; factory prices up 40% to 70%

Published on Nov 24, 2012

By Melissa Tan

PROPERTY investors are paying close attention to Tai Seng, an industrial area whose appeal has grown markedly since the arrival of an MRT station in 2010.

It is one of the few industrial areas with easy MRT access and the prices of strata factories, for instance, have jumped accordingly.

The area may be familiar to consumers needing to get electronics products serviced as several well- known retailers have set up headquarters there.

An authorised Apple service centre for iPhone repairs is next to Tai Seng MRT station, and laptop maker Asus has a service centre nearby. Musical instrument maker Yamaha has a technical service centre at Tai Seng Drive.

Several home-grown brands also call Tai Seng home, including shoe retailer Charles and Keith, Japanese food chain Sakae Sushi, and DIY store Home-Fix. Bakery chain BreadTalk is building its international headquarters in Paya Lebar iPark, at the doorstep of Tai Seng MRT station.

Analysts said the accessibility of the area and presence of relatively established businesses made the area's outlook promising. Average selling prices for strata factories in Tai Seng have jumped 40 per cent to 70 per cent over the past two years.

The 15ha Paya Lebar iPark, a pilot project by JTC that incorporates green spaces and specially designed buildings into the industrial park, has been the most significant recent development in the area.

As many major companies have set up offices in Paya Lebar iPark, demand for industrial space nearby from supporting SMEs has increased, noted Knight Frank research head Png Poh Soon.

Recent projects in the vicinity include Oxley Bizhub and Vertex, which are both on 60-year leases.

Tai Seng's awakening has come largely after the MRT station opened in 2010, said R'ST Research director Ong Kah Seng.

Before that, it was not well known for being a major industrial area as it was less accessible.

Compared with its neighbours - MacPherson as well as the Kaki Bukit and Ubi area - Tai Seng "seems to have the best of both worlds", Mr Ong added.

He said Tai Seng was cheaper than MacPherson and had a more "modern" profile than the Kaki Bukit industrial area which "is more developed by now and unlikely to have ample major new supply that can set benchmark prices or rejuvenate the area".

After adjusting for differences in age and tenure, industrial buildings in Tai Seng are up to 8 per cent cheaper than those in Kaki Bukit and up to 10 per cent cheaper than those in Sin Ming, but up to 5 per cent costlier than those in Sims Avenue, Mr Ong said.

Asking rents for spaces in Tai Seng's newer completed developments are $2.50 to $3.50 psf. For the area's older industrial buildings, which house a mix of businesses, rents range from $1 to $1.50 psf.

Mr Png noted these rental levels translate to a gross yield of 3.5 per cent to 4 per cent for existing freehold units, and 5 per cent to 5.5 per cent for 60-year leasehold units, depending on the type of industrial space. "This may appear to be lower than what some investors may look for which is closer to 8 per cent," he said.

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