12 industrial sites available in second half of year

[reporter2]

http://www.straitstimes.com/business...d-half-of-year

12 industrial sites available in second half of year

Jun 29, 2016

Wong Siew Ying


The Industrial Government Land Sales programme has listed 12 sites for the second half of the year - two more than in this half.

There are seven on the confirmed list and five on the reserve list, which can be triggered for public tender with an acceptable minimum bid.

"The Government will continue to release sufficient land... to ensure an adequate supply of industrial space in Singapore," the Trade and Industry Ministry said in a statement yesterday.

The seven confirmed plots have a total site area of 3.99ha, and all have a tenure of 20 years. Four are in Tuas South Link, two in Tampines Industrial Drive and one in Woodlands Industrial Park. This is the largest of the seven sites at 0.88ha.

Ms Brenda Ong, executive director for industrial and logistics at CBRE, said: "This will ensure that occupancy costs are controlled with ample supply possibly in 2018/2019."

Three of the five reserved sites are in Tuas South Link, one is in Tuas Bay Close and the other in Woodlands Height. These sites span a total area of 7.71ha and have tenures of either 20 or 30 years.

There were 10 sites offered in the first half - six on the confirmed list and four on the reserve list - with a total area of 12.24ha.

Consultancy Cushman and Wakefield noted that the average maximum permissible gross floor area (GFA) of the sites has also shrunk significantly from the first to second half.

The average GFA for confirmed list sites in the first half was 112,913 sq ft, 10.7 per cent more than the 100,781 sq ft being offered in the second half. The corresponding figure for sites under the reserve list has fallen by 26.2 per cent, from 432,009 sq ft to 318,827 sq ft.

"Given the ongoing weakness in manufacturing, the reduction in the average GFA for the upcoming sites is timely," said Cushman and Wakefield research director Christine Li.

Mr Tan Boon Leong, executive director and head of industrial at Knight Frank Singapore, expects demand for industrial space to remain muted in view of the uncertainties after Britain's decision to leave the European Union. "Even before Brexit, industrialists were already mindful about cost and the take-up of space. They are unlikely to be too gung-ho about their expansion plans now," he said.

Wong Siew Ying

[reporter2]

http://www.businesstimes.com.sg/real...d-supply-in-h2

Moderate, calibrated industrial land supply in H2

Govt puts 7 sites on Confirmed List and 5 on Reserve List; sites on Reserve List not expected to be triggered for sale

By Lynette Khoo

[email protected]

@LynetteKhooBT

Jun 29, 2016


MODERATE and calibrated. These words from property watchers pretty much summed up the second half industrial government land sales (IGLS) programme announced by the Ministry of Trade and Industry (MTI) on Tuesday.

In line with its policy of ensuring adequate land supply for industrialists without exacerbating the risk of an oversupply, the government is rolling out seven industrial sites on the Confirmed List totalling 3.99 hectares in site area.

Another five sites spanning 7.71 hectares are placed on the Reserve List, to be triggered for public tender when there is a minimum acceptable bid. The 12 sites combined have a total area of 11.7 hectares.

"The government will continue to release sufficient land through the IGLS programme to ensure an adequate supply of industrial space in Singapore," the MTI said.

While there are more sites under the H2 2016 IGLS programme, their total site area is smaller than that under the first-half IGLS.

MTI had earlier placed six sites on the Confirmed List and four sites on the Reserve List with a total site area of 12.24 hectares under the first-half IGLS.

The fact that sites in the Confirmed List are smaller plots of less than one hectare and zoned Business-2 for heavier industrial uses with 20-year leases did not escape the observation of many industry players, who noted that such sites cater to the single end-users.

Knight Frank executive director and head of industrial Tan Boon Leong said that this is a clear reflection that there is indeed an oversupply of industrial land.

The concentration of sites on the Confirmed List is still in Tuas and Tampines, the traditional industrial areas that appeal to single users, he noted.

SLP International executive director Nicholas Mak pointed out that the plot ratio of all the smaller sites on the Confirmed List is 1.4 and the government has not offered any site with a plot ratio of 1.0 in the past year.

"This could be part of the government's effort to push industrialists to intensify the use of the land parcels, even when the sites are located in Tuas," he said.

Some 65,540 sq metres of industrial space that can potentially be generated from the seven sites on the Confirmed List of H2 2016 IGLS is only 4.5 per cent higher than that in H1 2016, Mr Mak estimated.

"Given the current economic situation when many companies are restructuring, consolidating or putting their expansion plans on hold, such marginal increase in the industrial property supply and the putting of larger sites in the Reserved List will give the market more time to absorb the existing supply of industrial space and stabilise," Mr Mak said.

As expected, the government left two larger plots - a 2.72 ha site in Tuas Bay Close (previously in the H1 2016 Reserve List) and a 2.4 ha site in Tuas South Link 1 - in the Reserve List for H2 2016. Given their higher gross plot ratios and longer tenure of 30 years, they can be developed into multiple-user facilities.

Developers who see investment opportunities in these sites can trigger them for sale. But Mr Tan noted that the likelihood of these sites being triggered is low, given the overhang of unsold inventory in current industrial projects. With Brexit, people are treading more cautiously and that will also set the tone for the industrial market, he said.

R'ST Research director Ong Kah Seng said: "The iGLS H2 2016 adopts the same spirit as previous programmes, which released a moderate supply of sites for industrial property development."

He sees this as a calibrated move by the government to ensure that industrial land supply is "just sufficient and not over-providing industrial land for development".

"Smallish sites that come with around 20-year leases, especially those in Tuas, are unlikely to see bidding interest from developers as the short lease mean diminishing asset value life," he said. "It is more relevant for end-users (industrialists) who simply need to own their production space instead of renting it."

There is a 1.6 ha B1 site on the Confirmed List at Woodlands Height, which has a plot ratio of 2.5, for which the detailed sales conditions are available. Mr Ong noted that B1 sites have tended to attract investors. Developers usually see higher investment potential in B1 sites zoned for lighter industrial uses, compared to B2 sites.

Mr Ong said he does not expect any industrial site on the Reserve List to be triggered for sale in the second half of this year, amid "ailing industrial property conditions and substantial new completions of factory space from this year".

"Industrialists are clearly very cost-savvy by now as we see that new completions of strata factories in recent times generally have not attracted much leasing interest from industrialists or tenants," he said.