Smaller industrial land supply for first half of 2019
Five industrial sites will be made available for tender in the first half of next year after the confirmed list under the Industrial Government Land Sales (IGLS) programme was revealed yesterday.
Another seven sites will be made available for application under a reserve list, the Ministry of Trade and Industry (MTI) announced. The total site area for the 12 sites is 11.86ha, down from the total site area of 12.59ha for the previous such launch in the second half of this year.
Analysts say this reduction in supply may be in response to a languishing industrial market.
All the sites in the latest launch are zoned for Business-2 use, which means they may be used for clean industry, light industry, general industry, warehouse, public utilities and telecommunication uses and other public installations.
Sites on the reserve list are triggered for sale when an interested party submits an application with a minimum purchase price that is acceptable to the Government, or if more than one unrelated party submit minimum purchase prices that are close to the Government's reserve price for the site within a reasonable period.
The five sites on the confirmed list have a total site area of 4.22ha.
All have a tenure period of 20 years except for a plot in Senoko Drive which has a 30-year land tenure period.
Ms Christine Li, senior director and head of research at real estate services firm Cushman & Wakefield, said the release of the Senoko Drive site, together with a Woodlands Industrial Park E2/E5 site, will support the Government's move to turn Woodlands into a regional commercial and industrial hub.
Mr Alan Cheong, senior director of research and consultancy at real estate services provider Savills Singapore, said the reduction in supply is a "response to the tepid reaction of the market" towards the IGLS programme in the second half of this year.
"Even if more sites are made available in future... the demand side will be less keen to participate as potential bidders," he said, pointing to two sites in the previous launch that were not awarded as bids were below reserve prices, which may have discouraged potential bidders.
Ms Li said the latest launch comes amid moderating demand for industrial space this year due to uncertainties in the global outlook caused by US-China tensions.
She highlighted how demand for industrial sites through government land sales has also been muted.
"There is a lack of participation as none of the four tenders received more than four bids," said Ms Li, referring to the launch for the second half of this year. "This is to be expected as industrial rents stagnated this year due to the supply overhang from the preceding years."
The MTI said the Government will "continue to release sufficient land through the IGLS programme to ensure an adequate supply of industrial space in Singapore".
Ms Li expects that in the short to medium term, the continued tapering of new supply could lead to marginal increases in rents, which have stagnated.