Growth up to 10% expected for S'pore industrial market

SINGAPORE: Growth of up to 10% in land values, rents and capital values over the next 12 months is expected for factories and warehouses in Singapore, according to Colliers International's latest Asia Pacific Industrial Report.

Colliers cautioned, however, that while Singapore's economic outlook remains optimistic, fears of a possible slowdown in global demand may possibly weigh down on Singapore's trade-dependent economy in the first half (1H) of 2011.

The sales market was noticeably more active than the leasing market, with its values outperforming rents from April to September 2010. Collier attributed this to the low interest environment and the prospect of near-term capital appreciation.

Land values for factories and warehouses surged by an average 15% from the previous review period, while capital values rose by 10.1% to 11%. However, rents only inched up 1.5% to 1.6%.  

Real Estate Investment Trusts (REIT) led sales activity during the review period with acquisitions intended to boost their portfolio yields. These include Mapletree Logistics Trust's purchase of the Natural Cool Lifestyle Hub located on 29 Tai Seng Road for S$53 million (RM126.14 million); IMS AMP Capital Industrial REIT's purchase of the C&P Logistics Hub 2, a ramp-up warehouse and logistics complex on Penjuru Lane, for S$161 million; and Cambridge Industrial Trust's purchase of two factories at 22 Chin Bee Drive and 25 Tai Seng Avenue for S$15 million and S$21.5 million respectively.

On the leasing end, a major transaction was VWR International's deal to lease a 74,000-sq ft space at 18 Gul Drive.

The period under review saw several major completions including the 163,600-sq ft plant owned by Lonza Biologics Tuas Pte Ltd at Tuas South Avenue 6, and the close to 200,000-sq ft facility by Caterpillar S A R L Singapore Branch, located within Tukang Innovation Park in Jurong, to carry out its remanufacturing operations to serve the regional mining equipment market.

Meanwhile, a number of new initiatives aimed at enhancing the hardware and software aspects of Singapore's manufacturing sector were introduced during this review period.

Among them are the proposed development of a General Aviation Centre at Seletar Aerospace Park, with shared facilities for training, line maintenance and parking of smaller aircraft, an Offshore Marine Centre at Tuas View, which will offer companies common facilities along the waterfront to optimise the use of scarce waterfront land in Singapore; and a MedTech Centre at Tukang Innovation Park, to cluster leading medical technology industries in one area to create synergies.  

These initiatives should sharpen Singapore's competitive edge and help anchor new investments in Singapore, said Colliers.

High-spec industrial buildings also saw strong performance in the period under review; leasing activity picked up pace and helped soak up some excess supply. Rents for high-specs buildings have bottomed, recording a modest rise of 1.4% during the current six-month review period.

Colliers reported leasing deals concluded including Invensys Process System (S) Pte Ltd's commitment to 42,711 sq ft of space at 1 Changi Business Park Avenue 1, while sales transactions included City Development Ltd and Japan Land's disposals of New Tech Park in Lorong Chuan and a newly-completed data centre at 29A International Business Park in Jurong for S$305.90 million and S$145.00 million respectively.