Published February 1, 2011


Ang Mo Kio industrial site up for tender
Price could exceed $130 psf ppr, say market watchers

By EMILYN YAP

THE Urban Redevelopment Authority yesterday launched a 60-year leasehold industrial site at Ang Mo Kio Street 62 for sale via public tender.

Market watchers expect to see keen interest in the plot, with its price possibly crossing $120 or $130 per square foot per plot ratio (psf ppr).

The 2.8 hectare site, with a maximum permissible gross plot ratio of 2.5, is on the confirmed list under the H1 2011 government industrial land sales programme.

The land parcel is near Yio Chu Kang MRT station and is zoned for Business 1 development, which makes it suitable for various uses such as light industry, clean industry or telecommunications.

Savills Singapore industrial director Dominic Peters believes that the site could be sold for at least $120 psf ppr, and five or more developers could be interested.

This is the first industrial site to be made available in Ang Mo Kio in a long time, he said. Also, with the government introducing more tightening measures to the residential property sector, 'industrial (properties) would be a target for investors'.

Capital values of industrial property rose last year, driven by strong end-user and investor interest. Developers also bid actively for state industrial sites. In August last year for instance, Oxley Rising paid $158.1 million or $169 psf ppr for a 60-year leasehold plot at Ubi Road 1.

Knight Frank director of business space (industrial) Lim Kien Kim expects the Ang Mo Kio site to fetch at least $130 psf ppr.

He said that the plot has a good location, though its large size might make it more attractive to developers with 'deep pockets'.

Also, cooling measures for the residential sector could have tamed bullish sentiment across the entire property market, he said. While some investors have switched their focus to the commercial sector, the government would also be wary about commercial prices rising too quickly as that would affect Singapore's competitiveness, he pointed out.


Source: www.businesstimes.com.sg

Published January 17, 2011

Shoebox units in industrial projects gaining currency
Downsizing aimed at residential property investors thwarted by curbs

By KALPANA RASHIWALA

(SINGAPORE) The instant success of shoebox residential units has drawn some developers to adopt the same strategy for industrial projects - to target investors and speculators thwarted by restrictions on trading in residential properties introduced over the past year.


The trend, visible even before the authorities' latest measures last Thursday to cool the sizzling private housing market, is now expected to gain further momentum.

While smallish industrial strata-titled units have been available in the Singapore market for some time, industry observers say at least one developer - the Oxley Holdings group, which has been active in developing shoebox apartments - is now branching into developing small-format strata industrial units for sale.

Other developers, such as Soilbuild and Chui Teng, are also expected to launch projects with such units for sale in the next few months.

Shoebox apartments have sold like hot cakes over the past 18 months because of their affordable lumpsum investment quantum, and Oxley is said to be banking on the same strategy for industrial property. It plans to offer about 750 strata factory/warehouse units with an average size of about 1,000 square feet for its project in Ubi Road 1. These units will be priced at about $500,000.

The proposed scheme is subject to approval from the Urban Redevelopment Authority (URA). BT understands that URA typically approves strata industrial projects with unit sizes of at least 100 square metres (1,076 sq ft), although sources say that in certain locations, types of development and designs, the minimum size allowed could be even lower at about 80 sq m (861 sq ft).

A URA spokeswoman said the planning authority 'generally does not prescribe a minimum size for industrial units in order to give developers the flexibility to cater to the different needs of industrialists'.

'However, there is a need to ensure that the layout and configuration of industrial units are capable of effectively functioning as meaningful spaces for industrial activities (for example, manufacturing and warehousing).

'Where it is unclear how a proposed layout is going to cater to industrial activities, URA will work closely with the developer and architect to better understand their development proposal and, if necessary, refine and improve the layout of the development to facilitate the intended industrial activity. This will also help to ensure that the space is not illegally converted to other uses,' she added.

Oxley's proposed 10-storey project in Ubi is said to comprise four blocks and could also feature condo- type facilities such as a gym and rooftop swimming pool. It is located near Tai Seng MRT Station.

The project will come up on a 60-year leasehold plot that Oxley bought for a whopping $169 per sq ft per plot ratio (psf ppr) at a state tender which closed last August.

Market watchers estimate Oxley's breakeven cost for the project could be about $400 psf and that it could market the units for about $500 psf on net saleable area. The 375,150 sq ft plot is zoned for 'Business 1' use.

The lumpsum investment of about $500,000 per unit is similar to the entry-price for shoebox apartments and could draw investors who do not wish to be constrained by the restrictions when investing in residential properties, said Ong Choon Fah, head of consulting & research, SE Asia, at DTZ.

Agreeing, Colliers International director (industrial services) Tan Boon Leong noted that, unlike those who invest in private homes, investors in strata industrial units do not have to pay a seller's stamp duty if they flip the property within specified periods.

In addition, those dabbling in industrial property investment may borrow up to 80 per cent of their property values (as opposed to 50-60 per cent for residential investors), depending on whether they are companies, trusts or individuals.

There are also no restrictions against HDB flat owners who are barred from owning a private property during the HDB flat's five-year minimum occupation period.

The returns are relatively attractive. 'Yields on 60-year industrial units can be about 6-8 per cent - higher than the sub-4 per cent for residential,' said Mr Tan.

Soilbuild is expected to launch in the first half a 60-year leasehold ramp-up factory development at Yishun Street 23 with about 500 units; some will be large (above 10,000 sq ft) but the majority about 1,500-2,000 sq ft and could be priced around the $500,000 mark on average, say sources. Chiu Teng is expected to retrofit Kallang Bahru Complex into a project with more than 150 light industrial units of around 1,000-1,500 sq ft, BT understands.

Colliers' Mr Tan says small-format industrial units appeal not just to investors but end-users. 'They may buy a few adjoining units and knock down the walls for a larger contiguous area.'


Source: www.businesstimes.com.sg

Industrial properties as investment assets

by Ong Kah Seng
05:55 AM Dec 03, 2010

This year has been a rewarding year for the industrial property market. The overall momentum of the industrial property sector has been strong and more sustainable than that of the private residential sector. Besides continued rental recovery, factory units and multiple-user warehouses have received strong buying interest.

In the first 10 months of this year alone, a total of 1,491 factory units were transacted, a 45 per cent increase from the whole of last year.

A total of $3.58 billion worth of factory units were transacted this year to date, 96 per cent more than that transacted in the whole of last year.

Similarly, the sales activity of multiple-user warehouses was buoyant.

A total of 112 warehouse units were transacted this year to date, more than double the total number transacted last year. Some $90 million worth of warehouse units were sold this year to date, far surpassing the total of $28 million last year.




Factories

Primarily, the keen buying interest for industrial properties was driven by the strong recovery of the manufacturing sector, which encouraged industrialists to expand. Investors were hence confident of the investment potential of industrial properties, as the underlying demand for these properties was strong.

The improved sale of industrial units was also supported by the gradual price increase of such properties. With prices of factories still some 10 per cent lower than the historic high, investors felt safer with buying factory units where prices seemed reasonable. A factory unit with a shorter tenure can also be a more affordable purchase, requiring a lower initial capital outlay than office, retail and residential units.

The popularity of industrial properties is also underpinned by the maturing of the Singapore property market over the past 20 years, with investors now increasingly opportunistic.

The current property buyer is usually one who is open to any form of property investment as long as there are potential returns and the risks can be mitigated.

For a typical investor who is insensitive to the property type and looking at optimising his or her return, industrial property investments may seem attractive. For one, yields of industrial properties are typically higher, usually at least 6 per cent, whereas residential property yields are about 3 per cent.

The attractive yields of industrial properties are critical for the investor, as they are traditionally less physically impressive than other properties such as retail, office and residential properties.

The industrial sector is the only sector other than residential where the product offerings of a single-owner and multiple-owner buildings are similar.

The majority of the new office and retail developments are single-owner and buyers of commercial units can invest mostly in older strata buildings.

Although strata office buildings and shopping centres still have their relevance, they are generally inferior in terms of the facade, positioning and building specifications to the newer office and retail buildings.

However, multiple-ownership continues to be seen in all industrial developments, whether new or old.

An investor of factory units can expect to purchase properties in new and well-specified industrial developments.

A big leap in the industrial property market has taken place in the past few years, which have seen the success of various industrial real estate investment trusts, such as Mapletree Logistics Trust, Cambridge Industrial Trust and, most recently, the Mapletree Industrial Trust.

The emergence of industrial REITs has raised the profile of industrial properties and their appeal to investors.




Warehouses

Warehouses have benefited from the increasing sophistication of property market participants in their buying, selling and space usage strategies.

In addition to the standard use where products are stored for sale, warehouses are seeing increased interest from businesses which have to free up space for core business activities.

Storing excess company items, including archived printed information, in warehouses also presents the business with a neater office working environment.

Warehouses are also increasingly being used for personal storage, such as by families requiring a place for items that cannot be stored in their living premises.

Some families that have capitalised on the rising prices of residential properties by selling their homes and seeking temporary accommodation in smaller premises are seeing warehouses as a solution to their space needs. These families which are waiting for an opportunity to purchase better-value homes will require warehouse space to store their secondary assets.



How Sustainable?

The demand drivers for factories and warehouses are clearly in sight.

The price recovery will be incremental and underpinned by a stable manufacturing outlook and increasing awareness of the attractiveness of industrial properties.

The mature two-decade Singapore property market has seen pronounced rental and price cycles.

Market participants will continue to be opportunistic and open to new property ventures, and hence they will be receptive to industrial properties.

The industrial landscape has also modernised significantly, radically enhancing the perception of such properties.

Industrial REITs, which consistently report asset performance, will also increase the market transparency of industrial properties.

However, with a number of industrial properties having been transacted recently, potential buyers, including those who are seasoned residential but not industrial property investors, will be more thorough in evaluating the investment potential of the remaining industrial properties available for sale.

Potential buyers of industrial properties are likely to be increasingly cautious, as the growth of the manufacturing sector is also expected to moderate.



The writer is Senior Manager, Research - Asia Pacific at Cushman & Wakefield.

Source: www.todayonline.com