Industrial Land Sales Slate Hints At Slowdown

Source : The Business Times, January 1, 2008

MTI puts only one site on confirmed list, although it keeps 7 sites on reserve list.

THE Ministry of Trade and Industry (MTI)’s industrial land sales programme for H1 2008 seems to reflect a slowdown from the preceding programme for H2 2007.

MTI is releasing just one site through the confirmed list in the latest slate, a 1.68 hectare site at Woodlands Industrial Park that can be developed into a project with a maximum gross floor area (GFA) of 42,000 sq metres.

In contrast, the H2 2007 programme had two confirmed list sites with a total maximum potential GFA of 156,900 sq metres.

Both sites have been sold. The government launches tenders for confirmed list sites according to a prestated schedule, regardless of demand.

And although MTI is sticking to seven reserve list sites - these are launched only upon successful applications by developers - for H1 2008, the 174,570 sq metres maximum GFA they can potentially yield is slightly lower than the 190,800 sq metres that can be generated from the seven reserve sites in the H2 2007 programme.

‘Perhaps the MTI’s slowdown in industrial land sales reflects its own outlook of slower economic growth for 2008,’ a senior property consultant suggested.

Agreeing, another veteran consultant, Colliers International managing director Dennis Yeo, said: ‘They probably want to moderate industrial land supply because economic growth is likely to be slower in 2008. Nevertheless, the reserve list for H1 2008 having seven sites will ensure there’s sufficient supply - if developers and industrialists identify demand for them.

‘The reserve list method of supplying land is market-led rather than force feeding the market, which is what the confirmed list can sometimes be,’ Mr Yeo said.

The latest slate of reserve list sites comprises three new plots at Ubi Ave 4, Kallang Pudding Rd and Serangoon North Ave 4, and four sites which are being rolled over from the H2 2007 reserve list - comprising two plots at Yishun Avenue 6, and a site each at Toh Tuck Avenue and Ubi Ave 4/Ubi Road 2.

Among the newer sites, property consultants ranked the ones at Ubi and Kallang Pudding as the choicest. Savills Singapore head of industrial Dominic Peters observes that all three new reserve sites are relatively small plots (ranging from 0.54 hectare to 1.14 hectares in land area) and expects them to attract strong response.

‘The best would be the Kallang Pudding and Ubi sites; they’re likely to fetch around $55-60 per square foot per plot ratio’, citing their location in the central part of Singapore and assuming they are close to the Circle Line MRT Stations.

Colliers’ Mr Yeo predicts the Kallang Pudding and Ubi plots may fetch much higher prices - $70-100 psf ppr. ‘If the sites are within close proximity to the new Circle Line MRT Stations, the timing of their development would be just right,’ he added.

Seven of the eight sites in the latest slate are being offered on 60-year leasehold tenure, while the reserve list plot at Toh Tuck Avenue has a 30-year leasehold tenure.

With the exception of the Woodlands Industrial Park plot which is zoned Business 2 (B2), the other seven plots are zoned for Business 1 (B1) meaning they can be developed for a range of clean and light industrial, and warehouse use.

B2 sites can be used for B1 purposes as well as for general industrial use.