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First half 2019 Industrial Government Land Sales sees cutback in potential supply

by • June 29, 2019 • Land SalesComments (0)399

JTC launched two sites under the first half 2019 Industrial Government Land Sales Programme. The launch is part of the Government’s efforts to offer more choices for industrial development.

One site is available for tender and one site is available for application.

Site available for tender:

​S/N ​Location ​Site Area (Ha) ​Gross Plot Ratio ​Zoning ​Tenure ​Tender Closing
​1 ​Tuas South Link 3 (Plot 19) ​0.45 ​1.4 ​B2 ​20-year ​6 August 2019 (Tuesday), 11:00 am

The site at Tuas South Link 3 (Plot 19) was made available for application through the Reserve List system under the first half of the 2019 IGLS Programme. JTC received an application for the site to be put up for public tender, with a committed bid price of not less than $2,000,000.

Site available for application:

​S/N ​Location Site Area (Ha) ​Gross Plot Ratio ​Zoning ​Tenure
​1 ​Kaki Bukit Road 5 (Plot 4) ​2.02 ​2.5 ​B2 ​30-year

The site at Kaki Bukit Road 5 (Plot 4) is the last of seven Reserve List sites for the first half 2019 Industrial Government Land Sales Programme.

Mr Desmond Sim, CBRE’s Head of Research for Southeast Asia, commenting on the first half 2019 Industrial Government Land Sales Programme said:

“In light of the challenging economic outlook, the government is easing the supply of industrial land. The Confirmed List of the 2H2019 Industrial Government Land Sales Programme showed a 35.2% cutback in potential supply to 0.58 mil sq ft from the 1H 2019 IGLS programme. This is the lowest since the last peak at 1H 2013 (3.04 mil sq ft), reflecting the authorities’ consistent efforts to trim supply. Similarly, the Reserve List showed a 15.3% reduction in potential supply to 1.55 mil sq ft from the 1H 2019 IGLS programme.

Although the number of sites on the Confirmed List and Reserve List were reduced to four and six sites, respectively, there is a clear diverse array of sites in terms of geographical spread. The reduction aims to help rebalance the demand and supply situation in the industrial market. The vacancy rate of both factories and warehouses as at Q1 2019 stands at 10.5%, which represents approximately 52.97 mil sq ft of vacant stock.

Should any industrialists seek beyond the Confirmed List, the sites under the Reserve List still presents good feasible options. At the same time, some industrialists can turn to existing options, from public or private developments.”

first half 2019 Industrial Government Land SalesCommenting on the first half 2019 Industrial Government Land Sales, Mr Paul Ho, chief mortgage consultant at iCompareLoan, said “the government’s measured approach in its release of industrial land is understandable.

“JTC launched one site at Gul Circle (Plot E) for tender under the first half 2019 Industrial Government Land Sales Programme, but it was closed after receiving no tenders.”

In December 2017, the government announced that it as trimming its industrial land supply for the first half of 2018, after industrial prices and rents showed themselves to be responding as hoped to the government’s supply spike in recent years. The Government promised to continue to release sufficient land through the industrial Government Land Sales programme to ensure an adequate supply of industrial space in Singapore.

Industry experts noted at that time that the industrial government land sales programme for the first half of 2018 reflected the government’s sensitivity to the still fragile state of the industrial property market, in spite of the uplift in economic and trade conditions.

JLL head of research and consultancy Tay Huey Ying noted that “The measured H1 2018 IGLS programme is seen as a positive for the industrial property market as it would allow the market time to soak up the available space amid the more upbeat economic outlook. This would help to mitigate any downward pressure on industrial rents and prices in 2018.”

Others however noted that the recovery in the industrial market is “uneven” as some firms are still looking to consolidate or downsize their space requirements to remain cost-efficient. Supply completions for 2018 are expected to taper off due to construction of new properties, putting a squeeze on cost competitiveness on industrial land.

In March 2018, former Minister for Trade and Industry Lim Hng Kiang explained how the Industrial Government Land Sales is part of the solution to ensure that industrial land costs remain competitive.

“For companies in the manufacturing sector, rental costs constitute a relatively small proportion of business costs, and is usually less than 2.0% on average. We have nonetheless taken measures to ensure that industrial land costs remain competitive.”

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