Property consultant Colliers International says the industrial property market here has stabilised, with rents having bottomed out.

In its latest bi-annual survey on industrial real estate costs across Asia Pacific, the firm says the stabilisation was on the back of a turnaround in the US and Euro-zone.

In particular, export-oriented cities, like those in Singapore and China, posted strong double-digit year-on-year gains in manufacturing output in the first quarter this year.

This, Colliers says, contributed to a healthy demand for industrial properties across the region.

The firm’s director of research and advisory, Tay Huey Ying, notes that the average monthly gross rents of single-user factories in central Singapore has edged up.

From October to March, the rent was up by an average of 3.8 per cent to about S$1.35 per square foot.

Colliers also says institutional investors are returning to the industrial investment market here.

For example, Singapore saw the sale of six logistics facilities worth some S$713.2 million to Cache Logistics Trust for its listing in April 2010.

Going forward, Ms Tay says Singapore’s exceptionally-strong growth seen so far this year for the manufacturing sector, has raised confidence for the industrial property market.

As a result, rents, land and capital values of industrial properties are expected to see a steady increase in the next 12 months.

Source: Channel News Asia, 13 May 2010

To be completed in 2013, expansion will add 46,000 sq m to total 310,000 sq m

BIOMEDICAL research and development hub The Biopolis will undergo a $140 million expansion which will boost its total R&D space to some 310,000 square metres – a move aimed at meeting the increased demand for biomedical R&D space.

According to developer JTC Corporation, the expansion plans will add about 46,000 sq m to The Biopolis and is slated for completion in 2013.

The expanded Biopolis will also incorporate energy-efficient laboratory designs, which will translate to reduced energy consumption as well as higher savings for tenants where operational costs are concerned. Some of the measures that JTC will implement include more accurate sizing of laboratory equipment to reduce energy wastage, solar control and glazing for laboratory spaces to reduce heat gain, better lighting selection to reduce maintenance and running costs as well as the incorporation of natural ventilated spaces to reduce the building’s cooling load.

‘In the upcoming expansion of The Biopolis, sustainability will be taken a step further with . . . energy-efficient lab design. Some of the sustainable lab design strategies . . . will be more practical and cost- effective in nature,’ JTC said. The Biopolis has been purpose-built for public and private biomedical research institutes and organisations.

In 2009, Singapore’s biomedical sciences manufacturing output rose 2.5 per cent year-on-year to $20.7 billion, while total employment climbed 7.2 per cent to 13,174. Singapore aims for the sector to hit a manufacturing output of $25 billion by 2015.

Meanwhile, total business spending stood at $700 million last year while fixed asset investments (FAI) were $1.2 billion.

Located at one-north, The Biopolis is currently in Phase 3 of its development. By end-2010, Phase 3 will add 41,500 sq m of space to the biomedical hub for R&D laboratories and supporting offices.

Phase 1 of The Biopolis (a 185,000 sq m seven- building development) is fully occupied, as is Phase 2, which comprises a cluster of two buildings spanning 37,000 sq m.

Source: Business Times, 6 May 2010

BOON Keng Development made the top bid of $65.2 million for an industrial site at Woodlands Avenue 12 in a government tender which closed yesterday.

Boon Keng’s bid, which works out to $75 per square foot per plot ratio (psf ppr), is 29 per cent higher than the second highest bid of $50.6 million ($58 psf ppr) submitted by TGFB Pte Ltd and more than twice the application bid which triggered the tender. There were six bids in all for the site from developers including Soilbuild Group and Wee Hur Holdings

The 60-year leasehold site was launched after an unnamed party committed to bid at least $25.0 million ($29 psf ppr) for it last month. The site has a maximum gross floor area of 868,628 sq ft.

‘The strong GDP growth of 13.1 per cent year-on-year in Q1 2010, driven by a 30 per cent year-on-year surge in the manufacturing, has resulted in demand for new industrial space as evidenced by the six bids received by the Urban Redevelopment Authority,’ said executive director of CBRE Research Li Hiaw Ho.

The top bid is also more than twice the winning bid for industrial sites in Woodlands in the past two years.

A 60-year leasehold industrial site at the junction of Woodlands Industrial Park E5/Avenue 4 was awarded to Wee Hur in July last year for $22.9 million, or $34 psf ppr. And before that, a 60-year leasehold site along Woodlands Industrial Park E5 was awarded to Soilbuild Group in July 2008 for $13.6 million, or $30 psf ppr.

Mr Li estimates that the breakeven cost for this development is estimated to be about $240 psf to $260 psf. In the first four months of 2010, strata-titled units in Admiralty Industrial Park, located along Woodlands Industrial Park E1, went for between $163 psf and $249 psf, CBRE’s data shows.

Source: Business Times, 22 Apr 2010

Property developer Soilbuild Group has been awarded the tender for an industrial site at Yishun Avenue 6 with a bid of some S$29.3 million.

The 153,485-square foot site has a maximum gross floor area of nearly 384,000 square feet.

The 60-year leasehold site can be used for clean and light industries and warehouses.

Soilbuild estimates the total development cost including land at about S$75 million to S$80 million.

Development of the site is expected to take up to two years.

The business space for sale is targeted at small and medium-size enterprises and supporting businesses of multi-national companies operating in northern Singapore.

It is due to be completed by 2012.

With this award, Soilbuild will have a total of 12 business space developments in its portfolio totalling 4.9 million square feet.

The purchase will be funded by the group’s internal resources and bank borrowings.

Source: Channel News Asia, 16 Apr 2010

SOILBUILD Group Holdings submitted the highest bid for an industrial site at Yishun Avenue 6 in a government tender, the Urban Redevelopment Authority (URA) said yesterday.

There were five bids for the 1.43 hectare plot, which was offered for sale on a 60-year lease.

Soilbuild’s $29.29 million bid, which works out to $76 per square foot per plot ratio (psf ppr), was 4 per cent higher than the second highest bid, by KNG Land, which offered $28.28 million, or $74 psf ppr.

The other bidders were Ho Lee Group, OKH Management and Whye Wah Group.

The site, which is on the government’s reserve list, has been available since November 2007. It is zoned for Business 1 use, with a maximum permissible gross plot ratio of 2.5.

It was triggered in February after an un-named developer committed to pay at least $11.5 million, or about $30 psf ppr. It was launched for public tender on March 15.

Analysts said then that interest in the parcel – which is across the road from ITE East (Yishun) and near Yishun Industrial Park – would be healthy because industrial space end-users have been looking for land in the north of the island.

In a recent report, CB Richard Ellis said the industrial property market showed signs of improvement in the first quarter. Tenders for four industrial sites were launched. And several industrial Reit players made a few purchases.

Source: Business Times, 14 Apr 2010

DEVELOPERS have bid aggressively for a 60-year leasehold industrial site at Yishun Avenue 6 (Parcel 1).

Seven parties had expressed interest by the time the tender closed yesterday. OKH Management put in a top bid of $27.2 million, or $71 per square foot per plot ratio (psf ppr).

The is 2.4 times the trigger price of $11.5 million, or $30 psf ppr, that an unnamed developer had committed to pay in February, prompting the Urban Redevelopment Authority to put the site up for tender.

The second-highest bid, from Soilbuild Group, is not far below the front runner. Soilbuild has offered $25.12 million, or $66 psf ppr.

In fact, five of the seven bids are above $20 million. The other three above this level are from Whye Wah Group, KNG Land and Ho Lee Group.

The bids are ‘unexpectedly high’ and show that developers are bullish, said Knight Frank’s head of industrial business space Lim Kien Kim. ‘The economy is trending upwards, and there is demand for (industrial) space.’

The Purchasing Managers’ Index for March showed that the manufacturing sector expanded for an 11th straight month.

According to a CB Richard Ellis (CBRE) report yesterday, the industrial property market improved in the first quarter. Demand for factory and warehouse space is growing and rents could rise towards the end of the year, CBRE said.

The company’s research executive director Li Hiaw Ho said that the high bids for Yishun Parcel 1 could be due to a lack of industrial sites in the area. ‘No sites in Yishun were awarded under the government land sales programme in the past 10 years,’ he said.

He projects a breakeven cost of about $250-270 psf for development on the site.

Next to Parcel 1 is Parcel 8, the tender for which is ongoing. Mr Lim expects developers bidding for Parcel 1 to bid for Parcel 8 too. A developer could reap economies of scale by getting both plots, he said.

Parcel 1 is zoned ‘Business 1′ and is 152,770 sq ft, with a maximum gross plot ratio of 2.5.

Source: Business Times, 7 Apr 2010

THE industrial market showed signs of improvement in the first quarter of the year, according to two new reports published today.

In its latest market analysis, CBRE points out that demand for factory and warehouse space here is steadily growing, despite rents showing no signs of rising yet.

In the second report, DTZ points out that the industrial sector has overtaken the residential segment as the dominant sector for investment deals, though it’s thanks largely to one buyer.

In the first quarter of the year, the largest investment deal was the sale of the $323 million CWT Commodity Hub to Cache Logistics Trust, said CBRE.

In all, Cache made six sale-and-leaseback deals amounting to $713.2 million, helping to catapult first-quarter industrial investment sales to $1.02 billion, or 38.5 per cent of total transacted value, noted DTZ.

Residential investments amounted to $879.2 million, with the bulk coming from the sale of government sites.

Private residential investment sales accounted for just 6.3 per cent of total residential deals.

It reports that while investment by local firms continued to dominate due to purchases by local developers and real estate investment trusts (Reits), more foreign buyers could be on the way.

Also, Reit acquisitions are restarting, and more office buildings are expected to be transacted for redevelopment into residential use, it said.

Mr Bernard Goh, CBRE’s director of industrial and logistics services, said: ‘The (industrial) market appears to have turned around from the past year. We are seeing an improved demand for industrial space and a rise in rents can be expected towards the tail end of the year.’

Currently, factory and warehouse rents have not risen since the first quarter of 2008, when they first dipped in the current cycle, said CBRE.

For instance, in the first quarter of this year, average monthly rents for factory units held firm at $1.40 per sq ft (psf) for ground floor space, it said.

Meanwhile, an industrial site in Yishun Avenue 6 has attracted seven bids. OKH Holdings topped the tender with a bid of $27.2 million or $71 psf/plot ratio.

The bid is 8.3 per cent above the second bid from Soilbuild Group Holdings and more than twice the application bid.

CBRE estimates the breakeven cost for this development at between $250 psf and $270 psf.

It said the healthy interest could be due to the lack of industrial sites in Yishun. A more positive business sentiment could have also played a part in the robust response to the tender, it added.

Source: Straits Times, 7 Apr 2010

UNITED Engineers (UE) has bought two industrial buildings at Ang Mo Kio for about $25 million, as part of plans to grow its portfolio in build-to-suit properties.

Motorola owned the two buildings – Motorola Innovation Centre and Motorola Excellence Centre. They will collectively be known as UE BizHub Central after the ownership change.

The two complexes have a total gross floor area (GFA) of 378,426 sq ft. UE will centralise most of its business operations there by the end of the year. This means its headquarters at UE Square will move.

The company also aims to build a new wing at UE BizHub Central. This will raise GFA up to 500,000 sq ft, subject to planning approval.

UE is expanding its build-to-suit footprint, said the divisional managing director of its property division, David Liew. ‘We are looking out for other potential sites in Singapore which we could develop into build-to-suit, integrated space solutions under the brand name UE BizHub.’

UE owns another property under that brand, called UE BizHub East. This property is scheduled for completion in 2013 and will comprise 611,500 sq ft of office space, 26,400 sq ft of convention space and 250 hotel rooms or service apartments.

UE does not expect the acquisition of UE BizHub Central to have a material impact on its net earnings or net tangible assets per share this financial year. The counter gained 14 cents yesterday to close at $2.51.

Separately, private developer KNG Development has 80 factory and warehouse units in Kaki Bukit Industrial Estate for sale.

The units will be at the upcoming four-storey ramp-up industrial building, First East Centre. Selling prices start at $356,000. Given that each unit measures 1,800 sq ft or more, the price starts about $198 per sq ft.

Colliers International is marketing First East Centre. According to its director (industrial) Tan Boon Leong, monthly rents in the area are around $1.50 psf.

The units make an attractive investment because rental returns can reach 9 per cent, he said. Also, First East Centre is zoned Business 2 and will appeal to a wide tenant base, such as companies in vehicle repair and servicing.

Source: Business Times, 6 Apr 2010

UNITED Engineers (UE) has acquired an industrial property that it will use as its headquarters in Ang Mo Kio Street 64 for $25.18 million.

It will be centralising most of its business operations – including its headquarters currently located in UE Square in the River Valley area – at the new property by the end of the year.

The group will then rent out its prime headquarters space at UE Square, which takes up about 8,891 sq ft of lettable space on the 18th floor.

This move will enhance its operational efficiency, foster a closer working relationship and promote staff interaction, the group said in a statement yesterday.

The property, to be renamed UE BizHub Central, comprises a seven-storey building and a four-storey building that are linked by a sky-bridge.

The property has a total gross floor area of 378,426 sq ft.

The acquisition forms part of the group’s strategy to develop and own a portfolio of build-to-suit properties in the strategic nodes of Singapore.

This refers to building space tailored to the needs of individual tenants.

Leveraging on its build-to-suit capabilities, it plans to further modernise and expand UE BizHub Central to 500,000 sq ft in the next phase.

However, the plans are subject to planning approval, the group said.

‘We are looking out for other potential sites in Singapore that we could develop into build-to-suit, integrated space solutions under the brand name of ‘UE BizHub’ that will span the island state,’ said Mr David Liew, divisional managing director of the group’s property division.

Source: Straits Times, 6 Apr 2010

Units of a new development located in the Kaki Bukit Industrial Estate are being put up for sale.

The development, called “First East Centre”, sits on the first site that is zoned for “Business 2″ use and can be used for most trades including engineering and manufacturing.

First East Centre, developed by KNG Development, is a four-storey ramp-up industrial building located at 10 Kaki Bukit Road 2.

The development comprises 80 factory and warehouse units, each with an ancillary office.

Unit sizes start at 1,800 square feet and prices begin at S$356,000.

The date of completion is expected in the first quarter of 2012.

Property consultant Colliers International has been appointed as the exclusive marketing agent for First East Centre.

Source: Channel News Asia, 5 Apr 2010