Tag Archives: Singapore Industrial

Nine shop units in Holland Road Shopping Centre up for sale

Nine units of Holland Road Shopping Centre and one unit of 211 Henderson, an industrial building, are up for sale, either collectively at a guide price of just over S$24 million or on a piecemeal basis. All of them are freehold units and are being sold with vacant possession.

They are owned by two companies controlled by the Lim family that used to operate Lim’s Arts and Living, out of eight of the Holland Road Shopping Centre units. All nine shop units are on the second level.

Lim’s Arts and Living, which used to sell mainly furniture and furnishing goods, closed about a year ago. The sale of the 10 units is said to have arisen from a resolution of differences within the family.

CBRE is the sole marketing agent for the public tender exercise, which will close on Aug 23.

The 211 Henderson industrial unit, which is on the second level, has a guide price of S$3.23 million or S$650 per square foot based on its 4,962 sq ft strata area. It is ideal for light industrial use, with activities such as printing, photocopying, photographic film processing, packing and storage, commercial laundry, assembly and disassembly, said Sammi Lim, CBRE director of investment properties.

Over at Holland Road Shopping Centre, which is next to the Holland Village MRT Station, the units range from around 237 sq ft to 732 sq ft. Their guide prices are S$1.09 million to S$4.17 million – adding up to S$20.85 million, which works out to an average price of S$5,085 psf based the total strata area of 4,100 sq ft.

Ms Lim said: “The units will appeal strongly to end-users who have been on the lookout for shops to purchase and operate. For investors, the freehold status and potential yield return would be key attractions.”

The landmark development in Holland Village has well-known names such as Cold Storage and United Overseas Bank that have been operating in the building for years.

Said Ms Lim: “Assets in the Holland Village location are always very tightly held and it is extremely rare for any to be available for sale. Widely regarded as a successful enclave, the purchaser is expected to benefit greatly from the area’s fast evolving development and continued rejuvenation.”

Rental growth for office space set to moderate in 2015: Analysts

Office rentals have been pushing higher in 2014, with tight supply pushing rentals up by more than 10 per cent.

Consultancy Jones Lang LaSalle (JLL) projects that rentals at office buildings in the Central Business District (CBD) – including Marina Bay, Shenton Way and Raffles Place – could grow by some 16 per cent, driven primarily by the tight supply of new office space in Singapore.

Looking into 2015, they said rental growth is expected to moderate in the first half of the year, in anticipation of new office projects. JLL said about 3 million square feet of office space will come on-stream in 2016 and 2017, including Marina One at Marina Bay, Duo in Bugis, V on Shenton, and Tanjong Pagar Centre. This new supply could put pressure on rentals, as it is twice the absorption rate of 1.2 to 1.5 million square feet.

On Dec 4, four sites with commercial components were placed on the Reserve List under the Government Land Sales programme for the first half of next year. They included plots in Holland Road, Beach Road, Woodlands Square and Marina View/Union Street. But some industry players said there is room for the Government to release more sites in the CBD.

Mr Warren Bishop, CEO of Raffles Quay Asset Management, said: “When you are talking about a site being released in 2015, it is unlikely to come to market until 2019-2020. We would probably see there is certainly room for the release of more land within the Marina Bay area. Looking at the longer term beyond 2018-2019, there will be consistent demand, what has been released is probably not going to be enough to meet that demand.”

Mr Bishop added that the demand for office space in the years to come will need to be met. Otherwise, “you end up with situations where perhaps you see office rentals rise”, he said. “We had a situation in 2007-2008 where there was an imbalance between demand and supply.”

Looking to future Government Land Sales programmes, analysts expect the urban planners to roll out more commercial sites in the suburban areas for sale under the Confirmed List. These include locations like Jurong East, Paya Lebar and Woodlands. Meanwhile, to meet demand for office space in the CBD, market watchers suggested that the Government could put some sites for sale on the Reserve List, which can be triggered for sale by developers.

Analysts said they have observed a new trend in the leasing market, with some deals going beyond the typical ‘three plus three years’ lease terms.

Dr Chua Yang Liang, head of research for Southeast Asia at JLL Singapore, said: “We are hearing some cases where landlords are chasing bigger occupiers and offering them slightly longer leases, such as ‘five plus five’ or ‘six plus six’. They are locking them in for a longer period. Likewise, from the tenants’ perspective, a longer lease in such instances helps them in terms of amortising their overhead cost – like their fit-out costs for example.”

Overall, analysts said sentiment in the industrial property market remains mixed as Singapore shifts towards higher value-added manufacturing and service-oriented sectors.

Mr Nicholas Mak, executive director of research and consultancy at SLP International Property Consultants, said: “One of the challenges facing Singapore going forward is the changing nature of our economy, as it becomes a more service-oriented one.

“I think the Government needs to re-define the type of uses and trades and businesses that are allowed to use industrial space. As e-commerce within our economy expands, there will be more demand for storage space. The authorities could also re-look how they could allow more e-commerce companies to use industrial space.”

Industrial rents are seen falling by 3 per cent this year and SLP International said they could continue to decline in 2015 – by about three to five per cent – if supply continues to outpace demand.

Source : Channel NewsAsia – 22 Dec 2014

Enough retail, industrial space for businesses to grow: DPM Teo

The Republic has taken significant steps to remain competitive and companies that want to expand here will have sufficient space to grow, Deputy Prime Minister Teo Chee Hean said on Friday (June 20).

Speaking at a luncheon that followed the annual general meeting of the Singapore International Chamber of Commerce, Mr Teo said the Government hopes to see more companies use Singapore as a base to seize growth opportunities in Asia.

“The new industrial and retail space coming on-stream in the next three years provides new supply that is double the average demand over the past three years. This strong upcoming supply of industrial and retail space will give businesses more options and ample space to expand their operations in Singapore,” he said.

Mr Teo also said that by end-2016, prime office space in core business areas should have increased by about 13 per cent from current levels. Price and rentals of private residential properties have levelled off since the last quarter of 2013, he added.

Source : Channel NewsAsia – 20 Jun 2014

Outlook for office sector dim: analysts

Singapore’s retail and industrial property sectors are expected to continue to outperform the office market, which is feeling the impact of dampened demand from financial firms, analysts say.

Across the board, the pace of increase for rentals and prices in the three sectors declined in the fourth quarter of last year, data released by the Urban Redevelopment Authority (URA) showed yesterday. But the outlook for industrial and retail spaces is much better, according to experts.

Prices for industrial space rose by 4 per cent in the last three months of last year, compared with 6.9 per cent in the previous quarter, while rentals increased 0.4 per cent versus 2.4 per cent, according to URA data.

For retail shops, rental growth remained unchanged at 0.5 per cent in the fourth quarter from the previous three months, while prices rose 0.2 per cent compared with 3.4 per cent in the previous quarter.

“This is the sector with the least controversies and overhang,” property consultant Savills said. “Whilst some may fear an oversupply in the coming years … the demand for retail space still exceeds supply.”

The cooling trend was most evident in the office sector, where rentals increased by 0.3 per cent in the fourth quarter versus 0.9 per cent in the third, and prices rose 1 per cent versus 3.7 per cent previously.

“I expect office numbers to weaken, led by Grade A,” said Mr Colin Tan, research and consultancy head at Chesterton Suntec International. “Grade A depends on banks and financial institution, and the outlook for this industry has been, in a sense, depressed looking forward. So the demand from tenant group has shrunk.”

In contrast, the industrial sector is expected to fare better. “Industrials like marine and chemical industry are expanding this year. Therefore, we expect pricing at 5 per cent up, minimum, for the warehouse property sector,” said Ms Angela Lee, managing director at Lianco International Property.

Source : Today – 28 Jan 2012

Strata units in industrial, retail sectors gaining popularity

Mickey Mouse homes – or homes below 500 square feet in area – are not new.

But the trend of smaller format units has caught on in the industrial and retail sectors as well.

Known as strata units, they are deliberately kept small to be affordable to retail investors.

Strata shops are usually no larger than 300 square feet, which is a fifth of the size of an average retail store such as Starbucks.

A 300 square feet strata shop costs between S$500,000 and S$1 million.

Analysts speaking at the recent Real Estate Developers’ Association of Singapore seminar said there is a growing interest in investing these smaller shops.

Research from Knight Frank shows the number of strata shops transacted in 2010 jumped 60 per cent from a year earlier to about 480 units.

The total transaction value almost doubled to about S$530 million.

So far, 241 strata shops with a total value of S$247 million have been transacted in the first half of this year.

Png Poh Soon, head of consultancy and research at Knight Frank, said: “We noted that more new strata shops have been released into the market. In the past when one talks about strata shops, one tends to think about Sim Lim Square, Peninsula Plaza, People’s Park Complex and older strata shopping malls.

“The new supply that has come on in the past year includes Space@Kovan, Vibes@East Coast and Viva Vista in Pasir Panjang.”

Analysts say the popularity of small format units even extends to factories.

Chia Siew Chuin, director of research & advisory at Colliers International, said: “The industrial market is not affected by the cooling measures. And we would expect non-traditional buyers of properties of industrial sector to continue to look at the industrial segment as they look for more sources or places to park their funds.”

Based on Colliers research, sales of these industrial units grew 20 per cent to around 900 in the first half of this year.

Around 80 per cent of these were priced below S$1 million. In the same period, more than half of all non-landed properties transacted cost more than S$1 million.

Still, while strata units may be more affordable, analysts note that they are also more difficult to sell.

Source : Channel NewsAsia – 2 Aug 2011

Industrial and office property markets stabilising: DTZ Research

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 NewsAsia – 1 Apr 2010

Ellipsiz to sell stake in building at Joo Koon Crescent

Engineering and advanced packaging solutions provider Ellipsiz has agreed to sell its interest in a building at 12 Joo Koon Crescent for S$4.4 million.

The firm is expected to book a net gain of S$1.7 million from the sale.

Ellipsiz said the proposed sale will enhance its financial position and increase its working capital.

The property is a factory-cum-office building, whose lease is due to expire in January 2027, with an option to renew for another 29 years.

The building was damaged in a fire in March last year and reinstatement works are still on-going.

The building is valued at around S$4 million.

The sale is estimated to be completed by August this year.

Source : Channel NewsAsia – 22 Mar 2010

Singapore’s office and industrial rents continue slide in Q2

Property consultancy DTZ said office and industrial rents here continued their downward trend in the second quarter this year.

For the office market, average monthly gross rents of prime offices in Raffles Place fell by 19 per cent to S$9.70 per square foot, compared to a 25 per cent fall in the previous quarter.

Office rents in the Central Business District (CBD) fringe and de-centralised areas suffered a larger fall compared to the previous quarter.

The rent in Beach Road and North Bridge Road slid by 20 per cent to S$6.20 per square foot per month, worse than the previous quarter’s 13 per cent fall.

With office rents – especially those in the CBD – falling substantially, the rental gap between those in the CBD and those outside has narrowed.

Office rents in Marina Centre were 14 per cent lower than those in Raffles Place, less than the 23 per cent gap recorded during the peak last year.

Turning to the industrial market, DTZ said average monthly gross rents fell by 6.8 per cent for first-storey private industrial space and by 8.1 per cent for upper-storey space. This is the largest rental contraction since the third quarter in 2003.

Due to the large supply overhang in the office and industrial markets, DTZ expects the two sectors to remain soft until 2011.

Source : Channel NewsAsia – 6 Jul 2009

Business parks here show healthy demand

EVEN with the manufacturing part of the economy facing difficulties, demand for industrial space – particularly in business parks – is apparently still healthy, according to experts from the property firm DTZ.

By contrast, the market for office space is softening, the firm says.

Executive director Ms Chua Wei Lin said: “Demand for private industrial properties – in particular, hi-tech and business park space – is expected to be firm for the rest of 2008, supported by a spill-over of users from the office sector.”

But, in view of an increasing supply of space and a softer economic outlook, industrial space rentals are generally expected to experience a decline next year, she said.

For offices, the downturn is coming earlier, said Ms Chua’s fellow executive director,Ms Cheng Siow Ying. She said: “Office occupiers have become more cautious, with many adopting a wait-and-see approach. While negotiations for space are still ongoing, they are taking longer to conclude.

“Many occupiers have shelved expansion plans for the moment amid economic uncertainties, and (are instead) choosing to renew leases at existing premises to avoid relocation costs. Many also continued to relocate to more cost-effective, decentralised offices and converted state properties, while those that qualify for hi-tech industrial and business parks are relocating there.”

Average office rents peaked in the third quarter of the year, with no rental growth during the quarter. Although most landlords are maintaining their asking gross rents, they are now more flexible in their lease packaging, resulting in lower effective rental rates, DTZ research shows.

The pace of office users relocating to business parks accelerated, as more companies – deterred by high office rentals – sought premises with lower occupation costs. Occupancy of business parks averaged 92.5 per cent.

Most of the planned new space is built-to-suit buildings already committed to financial institutions, such as DBS and Citibank. Other multiple-tenanted business parks developments are also attracting strong interest; for example, Mapletree Business City in Pasir Panjang, which has one of its three business parks towers already pre-committed.

Source : Today – 9 Oct 2008

Private home prices up 0.2% in Q2, slower than earlier estimate

Prices of private homes in Singapore grew at a slower pace in the second quarter than initially projected – climbing at just 0.2 per cent against an earlier estimate of 0.4 per cent.

This is a far cry from the 3.7 per cent growth in the previous three months.

Analysts said this is the first time that final numbers have come in lower than flash estimates, suggesting that home prices are finally softening.

Mass market homes are carrying the overall price increase in the private residential property sphere as luxury home prices nudge downwards.

Prices outside the central region were up by 0.9 per cent, compared to a 0.1 per cent dip in the core central region.

Leonard Tay, director of Research, CB Richard Ellis, said: “Overall, we see a return of volume in (the) residential market in second quarter as quite encouraging.

“In the next two quarters, at least for the whole of 2008, we think volume will be sustainable and we expect transaction volumes for new home sales to finish the year at 4,000 to 5,000 units.”

In the second quarter, 70 per cent of new home sales were from the non-central areas. Colliers said Singapore’s positive mid-term prospects on the back of the completion of its two integrated resorts and Marina Bay Financial Centre will help to hold prices steady, and ensure that they do not decline by more than 3 per cent in the third quarter.

Overall, analysts said the residential property sector fared reasonably well in the first half of 2008, given the difficult external environment.

Ku Swee Yong, director of Marketing and Business Development, Savills (Singapore), said: “Transaction levels, price levels have held up pretty well. Most people have forgotten that the transaction in the first half of 2005 is similar to that of today. So it’s not as bad as what the market thinks.”

In the public housing market, resale prices continued to increase on the back of strong demand. They rose by 4.5 per cent, up from 3.7 per cent in the first quarter.

Meanwhile, office rentals went up by 6.3 per cent in the second quarter – the lowest increase in the past two years.

Analysts said they expect rents to remain flat for most of 2009 before trending downwards in 2010 to what they call more sustainable levels of S$12 to S$15 psf per month in the core business district.

In the next six to 12 months, landlords are expected to shift from profit focus to tenant retention as tenants start resisting further rental price increases.

In the industrial property sector, strong demand has pushed the average occupancy rate for factories to its highest since 2000, at 93.1 per cent. The take-up for warehouses also increased by 0.4 percentage point in the second quarter.

Despite the healthy take-up for both types of industrial space, the rental index for warehouses has remained unchanged for the quarter, while the index for factories rose by only 2.3 per cent quarter-on-quarter in the second quarter, compared to a quarter-on-quarter increase of 5.7 per cent in the first quarter.

As such, demand for industrial space is expected to remain healthy in the third quarter, but rents may only see a slight increase.

Source : Channel NewsAsia – 25 Jul 2008