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Date [ 2014-09-18, 07:27 ]

An overview  of this property market in Singapore.


(Singapore=Koreanpress) Benjamin Kim = With more industrial land and space being released, prices and rentals of industrialspace continued to moderate in 2Q 2014, and occupancy rates of the overall industrialproperty market continued to fall.

Moving forward, the Singapore government will continue to monitor the industrial propertymarket closely, and where necessary, release more land with a range of land sizes to suitdifferent industry needs. JurongTown Corporation (JTC) will continue to develop more specialised industrial land andinnovative facilities with productivity-enabling features such as shared facilities and servicesto support the growth of key industry clusters and catalyse new ones in the coming years.

In2H 2014, about 1.8 million sqm of industrial space is expected to come on-stream, out of which 400,000 sqm are multiple-user factory space.

Market Performance in 2Q 2014 Following the increase in supply of industrial land by the Government in recent years,
occupancy rates in 2Q 2014 have reached their lowest levels since late 2007. In 2Q 2014, the occupancy rate of the overall industrial property market fell by 0.9 percentage points on aquarter-on-quarter basis to 90.7%. For multiple-user factory space, theoccupancy rate fell by 1.1 percentage points to 87.3%.

On a year-on-year basis, the occupancy rate of the overall industrial property market fell by 1.7 percentage points, from 92.4% to 90.7%. For multiple-user factory space, the occupancy rate fell by 3.1 percentage points, from 90.4% in 2Q 2013 to 87.3% in 2Q 2014. Exhibit 1a: Occupancy Rates of Industrial Space

Rentals of industrial space have moderated in 2Q 2014, falling by 0.1% on a quarter-on-quarter basis. For multiple-user factory space, rentals were unchanged in 2Q 2014. On a year-on-year basis, rentals of industrial space rose by 5.0% in 2Q 2014, significantly slower than the average increase of 10.2% per year over the past 4 years. For multiple-user factory space, rentals rose 4.3% on a year-on-year basis in 2Q 2014, also significantly slower thanthe average increase of 9.8% per year over the past 4 years.

Prices of industrial space also continued to stabilize in 2Q 2014, rising marginally by 0.7% on a quarter-on-quarter basis. For multiple-user factory space, prices rose by 2.5% in 2Q 2014. This was mainly because the multiple-user factories transacted in 2Q 2014 comprised a higher proportion of freehold properties compared to the previous quarter. On ayear-on-year basis, prices for industrial space rose by 3.9% in 2Q 2014, significantly slowerthan the average increase of 18.8% per year over the past 4 years. Similarly, the 6.2% year-on-year increase in prices of multiple-user factory space was also significantly slower thanthe average increase of 19.1% per year over the past 4 years.

In 2Q 2014, a total of 11,600 sqm of JTC’s Ready-Built Facilities (RBF) were allocated to industrialists, of which 8,000 sqm were flatted factory space. These include 2,800 sqm of space at Blk 71 Ayer Rajah Crescent under the JTC LaunchPad @ one-north. The success of this pilot incubation centre for Infocomm and Media start-ups led to the expansion of two new blocks – Blk 73 and Blk 79, which will be ready to house more startupsand incubators by the end of this year.

Total RBF returns in 2Q 2014 was 13,700 sqm. Of the 13,700 sqm returned space, 8,200 sqm were standard factory space, out of which 2,000 sqm were due to relocation of companies to other land-based facilities.

Allocation of Industrial Land In 2Q 2014, 8 Industrial Government Land Sales (IGLS) sites totaling 5.7 ha were
successfully awarded, all of which were small plots targeted at end-users for single-user developments.In addition, JTC also allocated 33.4 ha of prepared industrial land (PIL) in 2Q2014. Out of the 33.4 ha, about 27.5 ha (82%) were allocated to end-users, while the restwere allocated to third party facility providers under Build-to-Suit (BTS) arrangement. In 2Q 2014, 20.9 ha of PIL were returned to JTC, with 8 ha (38%) returned fromthe Construction sector.

Outlook on Future Supply In 2H 2014, about 1.8 million sqm of industrial space are estimated to come on-stream, out of which 400,000 sqm are multiple-user factory space. Including the multiple-user factory space realized in 1H 2014, the total space added for this market segment will be 700,000 sqm this year. Between 2015 and 2017, an average of around 1.6 million sqm of industrial space are estimated to come on-stream every year. This is about 3% to 4% of current available stock, and is significantly higher than the average annual supply anddemand of around 1.3 million sqm and 900,000 sqm respectively in the past 3 years.

Similarly, for multiple-user factory space, the annual average of around 500,000 sqm estimated to come on-stream between 2015 and 2017 is also significantly higher than the average annual supply and demand in the past 3 years.

Upcoming Supply of Industrial Space JTC also has a series of development projects in the pipeline to provide space
solutions for industrialists in different industries. Development works for Fusionopolis Phase 2A (Towers A& B) are expected to complete in 2014. More space will also be available in JTC CleanTech Two @ CleanTech Park, following the project’s attainment of partial Temporary Occupation Permit (TOP) for 11,590 sqm of space in February 2014. This will add space for the research-related companies and institutions.

Beyond these projects, JTC will continue to develop next-generation high-rise developmentswith productivity-enabling features that will cater to the needs of industrialists in the comingyears.

JTC CleanTechTwo@CleanTech Park has a total project GFA of 22,490 sqm. In February 2014, they attained a partial TOP of 11,590sqm. The remaining 10,900 sqm is expected to obtain TOP in 3Q 2014.

Going forward, the Government will continue to monitor the industrial property market closely, and will continue to release an adequate amount of land, including smaller IGLS land parcels for end-users to build their own single-user developments. In the 2H 2014 IGLSprogramme, there are 9 sites (12.1 ha) in the Confirmed List and 6 (6.8 ha) sites in the Reserve List, with a total site area of 18.9 ha.

In the Confirmed List, there are 6 small plots (4.9 ha) targeted at end-users for single-user developments and 3 large plots (7.1 ha) targeted at developers for multiple-userdevelopments. In the Reserve List, there are 5 small plots (3.5 ha) targeted at end-users forsingle-user developments and 1 large plot (3.3 ha) targeted at developers for multiple-user developments.

The different land sizes cater to industrialists who prefer to purchase strata-titled industrial property as well as those who prefer to have the flexibility tocustom-build their own facilities.

In the 2H 2014 IGLS Programme, one of the sites (at Penjuru Road) targeted atdevelopers for multiple-user development has a shorter tenure of 20 years. The shortertenure is expected to reduce the upfront costs for industrialists looking to purchase their own properties and induce more prudent biddings for industrial sites.

Besides releasing more land, the Government will also ensure that upcomingindustrial developments better serve the needs of industrialists. For instance, in response tomarket feedback, the technical conditions on electrical provision and provision of goods lift on all B1 and B2 IGLS parcels have been revised with effect from the 2H 2014 IGLSprogramme.                

The Government will also continue to monitor the industrial property market closely, and introduce measures where necessary to ensure that the needs of industrialists
are met.

Industrialists can thus check out the above information and decide their land and/or factory purchases as short or long term plans.

abc@koreanpress.net

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