SINGAPORE is becoming a relatively more expensive location for businesses to site their warehouses.

According to a survey of 139 cities worldwide conducted by Colliers International, the Republic was the ninth most expensive city for prime logistics space during the second half of last year, even though rents remained stable.

In the previous six-month period, Singapore had ranked 14th.

The Colliers report cites the Singapore dollar strengthening against the US dollar and larger falls in rents in cities such as Seoul, Sao Paolo and Honolulu, as key reasons for the city state becoming more expensive relative to other locations.

In the second half of last year, rents for prime warehouse space in the MacPherson area remained relatively stable at about $1.50 per sq ft (psf) per month.

Warehouse space made up about 18.7 per cent of total industrial space in Singapore as of end-December last year.

Colliers noted that the industrial property market here remained largely stable in the first quarter on the back of improving business expectations in manufacturing.

First-quarter leasing activities were dominated by relocations and renewals, but expansions by firms remained scarce.

Colliers International’s director of research and advisory Tay Huey Ying is upbeat about future prospects noting that during the downturn last year, many firms were left with spare capacity and had to close down plants. ‘So they are now utilising their spare capacity and, hopefully, by the second half, some of them might be looking to expand.’

And, with recovery in the manufacturing sector gaining traction, demand for space could rise.

Rentals of conventional industrial space are forecast to continue to firm up – rising by up to 5 per cent over the next three quarters this year, Colliers said.

Source: Straits Times, 31 Mar 2010

The developer has to retain and restore the three buildings – Capitol Theatre, Capitol Building and Stamford House – on the site

THE government will soon put up for sale a commercial site with three landmark buildings – Capitol Theatre, Capitol Building and Stamford House – on it.

The site, which is located at the junction of Stamford Road and North Bridge Road and which also comprises Capitol Centre and a subterranean parcel below North Bridge Road that will link directly to City Hall MRT station, will be launched for sale in about two weeks. It has been on the government’s reserve list since December 2008.

Analysts expect an ‘interesting’ retail-cum-lifestyle-cum-hotel development will come up on the 99-year leasehold site, which has a maximum permissible gross floor area of about 542,400 sq ft.

The land parcel will be sold through a ‘concept and price revenue’ tender process, said the Urban Redevelopment Authority (URA). Under this system, tenderers are required to submit their concept proposals and tender prices in two separate envelopes. The concept proposals will be first evaluated against a specified set of specified criteria and only those that meet the criteria will be considered. The site will then be awarded to the tender with the highest bid price among those with acceptable concept proposals.

The developer of the site is required to retain and restore the three ‘historically and architecturally significant buildings’ – Capitol Theatre, Capitol Building and Stamford House – for re-use. In particular, URA said that Capitol Theatre is required to be used as an arts or entertainment-related performance venue. Capitol Centre, on the other hand, can be torn down.

The winning bidder is also required to set aside 25 per cent of the total gross floor area for hotel use. This will help to strengthen the hotel cluster in the area, which now includes Swissotel The Stamford, The Fairmont and Grand Plaza Park Hotel, URA said.

URA is releasing the site as it has received an application from an unnamed developer, who has committed to bid a least $100 million – or $184 per square foot per plot ratio (psf ppr) – for it. But the site can fetch $400-$600 psf ppr, analysts said.

‘With a predominantly retail development at this historical central landmark, the land cost of site is likely to range from $400 to $500 psf based on the maximum permissible gross floor area,’ said Li Hiaw Ho, executive director of CBRE Research. ‘This would translate to an estimated amount of between $220 million to $270 million.’

Others put the eventual selling price as high as $600 psf ppr. However, analysts said that the number of bids will be limited as the site will be challenging to develop.

‘Basically, the conservation element will limit the number of bidders,’ said Tay Huey Ying, Colliers’ director for research and advisory. URA’s criteria requires the tenderer and design team to have ‘proven track record and experience in developing developments of similar quality’ – which automatically eliminates many potential bidders.

Separately, JTC Corporation also said yesterday that it has launched a 5 ha industrial site at Tampines for sale – the first industrial site this year to be released from the government’s confirmed list, which was reinstated in December 2009 to meet the demand for industrial land arising from improved economic conditions.

The site is located at the junction of Tampines Industrial Avenue 4 and Tampines Industrial Avenue 5, within the Tampines Wafer Fab Park. It will be sold with a 30-year lease and can yield a total gross floor area of close to 431,000 sq ft. Analysts said that the plot can fetch $40-$50 psf ppr, which translates to some $17.2-$21.5 million for the entire plot.

Source: Business Times, 2 Apr 2010

Singapore’s industrial and office property markets are showing signs of improvement.

Property consultancy DTZ Research on Wednesday said that islandwide office occupancy improved in the first quarter of this year.

The average islandwide office occupancy rate rose 0.7 percentage-point on-quarter to 92.4 per cent.

DTZ said the improvement in occupancy rate was due to an increase in demand.

There was also no new completion of office space in the first three months of this year.

However, office rents will bottom out only sometime next year, or by the end of the year.

This depends on whether the economy grows stronger than expected.

Separately, consultant CBRE said the booming residential market has driven many existing commercial building owners towards redevelopment.

CBRE estimates that about 1.2 million square feet of offices will be converted to mainly residential use up to 2013.

With the economy on a growth path, DTZ expects the industrial rental market to bottom out this year.

But they caution that the recovery will be at a slow pace, due to new supply coming on stream.

Source: Channel News Asia, 1 Apr 2010

DEFU Lane has the dubious honour of being home to companies which are among the worst industrial polluters.

The industrial estate, which has for more than 30 years housed a hotchpotch of car workshops, scrap metal recyclers and construction firms, is where short cuts are being taken in waste disposal.

For dumping silt and oil into drains, 15 firms there have been fined $2,000 each since January 2008; 110 warning letters have been sent out.

The worrying thing is that the water in Defu’s drains flows into the Marina Reservoir, which national water agency PUB estimates will come to provide for up to 10 per cent of Singapore’s water needs; some of these drains will also eventually discharge their contents into the upcoming Serangoon and Punggol reservoirs.

Although the actual number of firms hauled up for pollution may be higher in other larger industrial estates, the figures are proportionately higher in Defu, the National Environment Agency (NEA) said in response to queries from The Straits Times.

The Environmental Protection & Management Act has set the upper limit of fines for companies prosecuted in court at $20,000 for first offenders and $50,000 for repeat offenders.

The pollution issue in Defu is a long- standing one, borne partly out of a lack of proper infrastructure, such as, for example, better roads instead of its bumpy dirt tracks, and proper waste storage tanks.

Anti-pollution guidelines set by the PUB require companies to use proper containers to store liquid and oily waste and to hire licensed contractors to dispose of this waste instead of throwing it into drains. But some companies are not following the guidelines.

With the Marina Reservoir already having been open for two years, the need to clean up Defu, which is part of its 10,000ha urbanised catchment area, has gathered pace.

The NEA, together with PUB and the Housing Board (HDB), has stepped up checks on industrial and commercial hubs in the catchment area, including Ang Mo Kio, Queenstown and Eunos.

Two years ago, the HDB unveiled plans to redevelop Defu, including laying down better roads and transport links, and providing waste storage facilities.

Because of the pending redevelopment, the HDB put about 85 per cent of its 1,000 Defu tenants on fixed-tenancy agreements of between one and three years.

The possibility that the companies may have to move out when the tenancies expire has caused uncertainty, and they are peeved.

A vexed manager of a scrap metal recycling firm who declined to be named said: ‘We invested half a million dollars in new equipment just a year ago. If we have to move out in a year, why would we have moved here in the first place?’

An HDB spokesman explained that it was necessary to rejuvenate Defu ‘to better manage the quality of discharge from the factories to comply with the water pollution control requirement’.

It added that the primary aim of the redevelopment of the estate was to enable tenants to leverage on the area’s prime location.

It declined to elaborate on the redevelopment plan, such as the length of future leases or the types of industries it wanted for Defu.

The spokesman said the current tenants have ‘ample time’ to make relocation plans if necessary.

It added that it held half a dozen focus-group discussions with Defu tenants between May and November last year.

Source: Straits Times, 1 Apr 2010

Average monthly gross rent for hi-tech industrial space up 1.6% in Q1

Better days may be ahead for landlords of industrial space, with rents having stopped falling for some properties and even rising slightly for others.

According to DTZ, the average monthly gross rent for hi-tech industrial space, including that at business and science parks, was $3.15 per sq ft in the first quarter of 2010.

This is a 1.6 per cent increase from Q4 2009 and marks a turnaround from that quarter’s 3.1 per cent fall.

For private industrial space on ground and upper floors, monthly rents were unchanged in Q1 this year at $1.95 psf and $1.55 psf respectively.

‘With the economy on the growth path, the industrial rental market is expected to bottom in 2010,’ said DTZ South-east Asia research head Chua Chor Hoon.

But the recovery will be slow ‘in view of the new supply coming on stream’. DTZ expects 9.3 million sq ft of new industrial space to hit the market this year, and 8.3 million sq ft next year.

Separately, Colliers International said rents for conventional industrial space edged up in Q1 as conditions in the manufacturing sector improved.

It expects such rents to rise by up to 5 per cent over the next three quarters. ‘Manufacturers planning for the upturn could drive demand for space in the coming months,’ said its research and advisory director Tay Huey Ying.

Colliers found the average monthly gross rent for prime flatted factory space on the ground floor was $1.91 per sq ft in Q1 – up 2.1 per cent from Q4 2009.

The rent for space on upper floors rose a marginal 0.6 per cent to $1.62 psf in Q1 from $1.61 in Q4.

The average monthly gross rent for prime flatted warehouses on the ground floor was $1.89 psf in Q1, remaining flat quarter-on-quarter.

The rent for warehouse space on upper floors rose to $1.52 psf, up 0.7 per cent from $1.51 in Q4.

The marginal increase in rents for conventional industrial space came on the back of a pick-up in the manufacturing sector. The government said last week that industrial production in February grew 5.9 per cent from January on a seasonally adjusted basis.

Colliers’ Ms Tay noted an increase in leasing activity in Q1 this year. With more tenants shopping for space, some landlords have had more bargaining power, she said.

But that does not mean landlords have been able to raise rents significantly. ‘Leasing activities in Q1 2010 were dominated by relocation and renewal deals, while expansions by firms remained scarce, as many manufacturers were operating on their spare capacity,’ Ms Tay said.

What provided some support for rents was the entry of foreign companies into Singapore to tap the larger Asian market, she said. For instance, US-based Lattice Semiconductor Corporation set up operations at Techpoint in Ang Mo Kio in February.

Cushman & Wakefield Singapore managing director Donald Han has also seen a pick-up in leasing activity. During the same time last year, the market was uncertain and companies were not keen to spend, he said.

Now, a two-tier market is emerging as tenants become attracted to newer space with better facilities and higher specifications. ‘The low-end industrial space will probably feel the pinch’ and landlords may have to consider retrofitting these properties or lowering their rental expectations, he said.

Source: Business Times, 1 Apr 2010

Property consultancy Colliers International has launched the tender of a freehold industrial site at No.21, Kim Keat Road at an asking price of S$42 million.

That works out to S$734 per square foot per plot ratio. This includes a possible development charge of S$25 million.

Under the 2008 Master Plan, the site is zoned for ‘Business 1′ use. But the Urban Redevelopment Authority (URA) would consider re-zoning the site from industrial to residential use with a gross plot ratio of 2.8.

The site, located near Lorong Ampas, is currently occupied by a seven-storey light industrial building.

Collier’s executive director Ho Eng Joo said he expected the site to attract a pool of keen buyers.

That’s because it is located at the city fringe and in a mature enclave, well-served by a host of amenities.

He said the site could be redeveloped into a residential development consisting of 182 apartments with sizes ranging between 500 and 1,000 square feet.

The tender closes on 28 April.

Source: Channel News Asia, 30 Mar 2010

THE Urban Redevelopment Authority has launched the tender for an industrial site next to Seagate’s facility in Woodlands.

An unnamed developer has agreed to bid at least $25 million or $28.78 per square foot per plot ratio (psf ppr) for the 60-year leasehold plot. The site is zoned Business 1, which means light and clean industry and warehouse uses are allowed.

The 347,451 sq ft land parcel can be built up to a maximum gross floor area of 868,628 sq ft. The tender for the plot closes on April 21.

Bernard Goh, director, industrial services at CB Richard Ellis, reckons the plot will be attractive to bidders who are contractors as well as developers. ‘It may attract three bids, with the top bids likely to be in the $35-40 psf ppr range,’ he added.

Colliers International data shows that three industrial sites have been sold in the Woodlands area in the past four years at prices ranging from $28 to $35 psf ppr. The sites are zoned Business 2, which also includes general industrial use.

The latest plot on offer, at Woodlands Avenue 12, was made available for application under the Government’s reserve list system in December last year.

Ministry of Trade and Industry’s Industrial Government Land Sales Programme for first half 2010 comprises eight reserve list sites (including the latest plot at Woodlands Ave 12 which has been triggered) and two confirmed list sites.

Source: Business Times, 26 Mar 2010

It became much cheaper for industries to rent a space in Singapore last year than in cities such as Tokyo, Hong Kong or Sydney.

In Cushman & Wakefield’s global ranking of industrial space occupancy cost, Singapore fell sharply to 18th from fifth place in the previous year. Industrial rents on the island had slipped more than in several other cities as demand for space from the trade and manufacturing sectors weakened from the downturn.

According to the property consultancy, the annual industrial occupancy cost here was 88.48 euros per square metre (S$169 psm) last year. Rents were down about 16 per cent year-on-year.

The drop ‘places Singapore in a more favourable position to attract new demands with its greater cost competitiveness and availability of quality space,’ said Cushman & Wakefield Singapore’s managing director Donald Han. Many other regions in the world also suffered drops in industrial rents. Cushman & Wakefield noted that globally, rents fell by an average of 5.5 per cent in 2009.

Nonetheless, industrial rents in London’s Heathrow stayed relatively constant and the area kept its position on top of the list with the most expensive industrial space. The occupancy cost there was 200.28 euro psm per year.

In second place was Tokyo, with an annual cost of 151.73 euro psm. Hong Kong rose six spots to third on the table, with an annual cost of 145.89 euro psm.

Apart from Tokyo and Hong Kong, the only other Asia-Pacific city to make it to the top ten was Sydney, where the annual occupancy cost was 92.83 euro psm.

As global economic conditions stabilise, Cushman & Wakefield expects to see industrial rents increase towards the end of this year, ‘the extent of which will be driven by the speed in recovery of global export activity’.

But Singapore may not see rents rise until the second half at the earliest, the consultancy said.

Colliers International industrial director Tan Boon Leong shared similar views – he believes industrial rents here may increase sometime in the second half.

He has seen rental activity pick up in the last few months, but that mainly involved companies moving to other premises, he said. The emergence of new demand for space would give an indication of rents firming up, he added.

Source: Business Times, 17 Mar 2010

The government has accepted an application from a developer to put up an industrial site at Woodlands Avenue 12 for public tender.

The Urban Redevelopment Authority (URA) said it has received an application from a developer who has committed to bid a price of not less than S$25 million for the land parcel.

The land parcel has a site area of about 3.2 hectares and a maximum gross plot ratio of 2.5. It can be developed for a variety of uses under “Business 1″ zoning and has a lease period of 60 years.

URA will launch the public tender for the site in about four weeks.

The land parcel was made available for sale through the Reserve List System.

Under the system, the government will put up a Reserve List Site for public tender if it receives an application from a developer who commits to bid at or above an acceptable minimum price.

Source: Channel News Asia, 11 Mar 2010

An industrial site in Yishun has been put up for sale by public tender.

The land parcel was made available for sale through the Reserve List system in May 2007. Under the system, a site would be released for sale only if a bid with an acceptable minimum price is received.

Last month, the Urban Redevelopment Authority (URA) announced that it had received an application from a developer to put up the land parcel for tender.

The developer has committed to bid at least S$11.5 million for the land parcel in the public tender.

Located at Yishun Avenue 6, the land parcel has a site area of some 1.42 hectares and a maximum gross plot ratio of 2.5. It can be developed for a variety of uses under “Business 1″ zoning.

The site will have a lease period of 60 years.

Source: Channel News Asia, 8 Mar 2010