Govt cuts industrial land supply for 2016

The Government has further trimmed the supply of industrial sites in its land sales programme for the first half of next year amid what analysts describe as a market glut.

The total area being offered by the Ministry of Trade and Industry is 12.24ha, down from around 14ha put up in both the first and second half of this year.

Six sites with a total area of 4.04ha are on the confirmed list, down from 10 sites with a total area of 6.12ha in the second half of this year.

Colliers International head of industrial services Tan Boon Leong said: “This reduced supply… suggests the Government is watching the sector closely, and taking into consideration the large amount of existing and upcoming supply.”

As in the second half of this year, all sites on the confirmed list are on 20-year leases. This should not be a problem as most of them are less than a hectare in size and are meant for end-users rather than developers or investors, said SLP International executive director Nicholas Mak.

However, if they are strata-titled, mortgage lenders may not be keen on these 20-year leasehold units, he added. A straw poll of three Singapore banks by SLP International found that only one was ready to grant mortgages to buyers of new 20-year leasehold strata units.

A shorter loan tenure could mean a larger monthly mortgage repayment, which may be tough for smaller companies.

“Industrial space with shorter leases may not necessarily help small and medium-sized enterprises lower the cost of their premises,” said Mr Mak.

Three of the four reserve list sites – all carried over from the sales programme from the second half of this year – are on 30-year leases.

These are larger sites, and so, more suited for strata sales, said Mr Tan. “While interest among developers for strata industrial units has dwindled quite a bit, it is good these 30-year sites are still available for them to trigger as they deem appropriate.”

He added that the move last month by car company Trans Eurokars to buy a 1.63ha site with a plot ratio of 2.5 could suggest that non-developers might start purchasing these bigger plots.

One of the sites unveiled yesterday is in the B1 category, for light industrial use. There is already a large supply of B1-zoned space available for sales and occupation, said Mr Mak.

There were around 2,300 industrial units totalling 657,000 sq m in uncompleted strata-titled developments still available for sale as at Sept 30, with about 56 per cent of them zoned for B1 use.