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IGLS Programme – Government takes measured approach with 2H land release

by • August 30, 2018 • Property Market NewsComments (0)207

JTC on 28 August launched two sites under the second half of the 2018 Industrial Government Land Sales Programme (IGLS Programme). The launch of the IGLS Programme  is part of the Government’s efforts to offer more choices for industrial development. Both sites are available for tender.

S/N Location Site Area (Ha) Gross Plot Ratio Zoning Tenure Tender Closing
1 Corporation

Drive (formerly

referred to as

Yung Ho)

1.28 2.5 B2 30-year 9 October 2018

(Tuesday), 11:00am

2 Tampines North

Drive 3 (Plot 2)

0.48 2.5 B2 20-year 23 October 2018

(Tuesday), 11:00am

 

The site at Corporation Drive was made available for application through the Reserve List system under the second half of the 2018 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 $20,700,000. The site at Tampines North Drive 3 (Plot 2) is the second out of six Confirmed List sites for the second half of the 2018 IGLS Programme.

Commenting on the IGLS Programme, JLL, a prominent real estate services company, said: that the uplift in economic and manufacturing sector performances and signs of an imminent bottoming of the industrial property market have not prompted the Government to up the IGLS supply for 2H 2018 which has been kept relatively similar to that for 1H 2018.

It noted specifically that the 2H 2018 IGLS Programme will offer 13 sites covering 12.59 ha, comparable to the 13 sites covering 12.56 ha on the 1H 2018 IGLS Programme. The Government’s measured approach for the 2H 2018 IGLS Programme could have stemmed partly from the waning interest observed for recent IGLS plots as this could suggest that demand for IGLS land has been more or less satisfied. There is thus little justification for increasing the overall industrial land supply at this juncture.

Colliers Research: Industrial property market sector is continuing to find its footing

Ms Tay Huey Ying, Head of JLL Singapore’s Research & Consultancy division said: “To illustrate, three out of six parcels on the 1H 2018 Confirmed List have failed to attract any bids. For plots that garnered bids, those with tender closings from November 2017 have received only one to two bids, down from the typical three to five bids seen for IGLS sites during the most part of 2016 and 2017. The Government could have also taken into consideration downside risks such as a potential escalation of a global trade war which is expected to have some dampening effect on the Singapore economy and the manufacturing sector performance.

She added: “The successful triggering of one 30-year leasehold site on the 2H 2017 Reserve List and two similar plots on the 1H 2018 Reserve List for open tender also did not compel the Government to place any 30-year leasehold plots on the Confirmed List. “Instead, to cater to varying needs and potential strengthening in demand, the Government has placed a slightly larger quantum of industrial space in terms of potential gross floor area in the Reserved List for industrialists/developers to trigger for tender in response to market demand. The seven plots on the Reserved List could yield a total gross floor area of 2.12 million sq ft, up 7.7% from the 1.97 million sq ft that the seven plots on the 1H 2018 Reserved List could generate.”

IGLS Programme

Image credit: Google map

In 2012, the Government halved the IGLS tenure to 30 years (from the previous 60 years) to make it cheaper, It said the move will increase government flexibility for land redevelopment. Shorter tenures should make Industrial Government Land Sales sites extra affordable and adaptable, claimed the government.

Several industry players claimed then that the reduced IGLS tenures could scare off industrialists. They said the shorter-leased sites will have diminished long-term values and require a tougher loans process.

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.

First of all, JTC Corporation benchmarks its land prices internationally to ensure that they are competitive.

Second, the Government releases land for private-sector industrial developments through our half-yearly IGLS Programme to ensure that there is sufficient land and industrial space to meet demand, support economic growth, and maintain the stability of the industrial property market.

With an increase in the supply of land and industrial space, the industrial price index has decreased by 16.6% from its peak in 2014, while the industrial rental index has declined by 13.4% from its peak in 2014.

A bottom is in sight for industrial property market

Third, we have also made public the statistics on industrial space prices, rents, as well as occupancy rates to improve transparency and help companies make informed decisions.

We must continue to take bold strides to seize opportunities to innovate, and not let our domestic constraints of a tightening labour market and scarcity of land hold us back.”

In 2016, the Government announced that industrial land and properties previously under the Housing & Development Board (HDB) will be transferred to JTC Corporation (JTC) by the first quarter of 2018. About 10,700 industrial units and 540 industrial land leases were transferred from the HDB to JTC in this period. The move was implemented to improve the support for small- and-medium enterprises in terms of their land space needs as their businesses grow.

JTC and HDB said in a joint press release then that the consolidation of industrial land and properties under JTC will allow tenants to have a “one-stop access” to the full range of public sector industrial facilities available and that the consolidation will enable the pooling of similar capabilities and resources under one agency for better planning and operational efficiency.

It was also touted to enable more comprehensive master-planning of new industrial districts and better clustering and integration of complementary activities along the value-chain.

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