Wednesday, May 11, 2011

Industrial plot in Tuas will go to tender

AN INDUSTRIAL site at Tuas View Square is slated to come up for public tender in about two weeks.

The 45-year leasehold land parcel was made available for sale under the reserve list of the first half of this year's Government Land Sales programme.

The 0.4ha site was triggered after a developer agreed to pay at least $4.89 million for the land.

With the land's plot ratio at 0.9, this price translates to a minimum sum of $116 per square foot per plot ratio.

Sites under the reserve list will be made available for public tender only after a developer comes forward to commit a minimum price for the land.

The Urban Redevelopment Authority (URA) said the site's launch date will be announced later.

Market watchers say an increasing demand from investors for industrial spaces has resulted in more competitive bids being submitted for Government Land Sales industrial sites.

'Now with the current curbs on the residential market, more developers might see industrial sites as a more attractive option that carries a lower investment risk,' said Mr Dominic Peters, director of industrial real estate at Savills.

Land prices have grown significantly in the last few quarters, say property consultants, with the winning bids for sites in locations like Ubi almost doubling in the past 21/2 years.

The relatively affordable prices of industrial land may be another draw for buyers.

'Buying a residential site would usually require that developers submitted a bid of hundreds of millions,' said Colliers International director for industrial services Tan Boon Leong.

'Industrial sites, on the other hand, usually go for a much lower price.'

Last September, a plot of industrial land in Kaki Bukit Avenue 4 attracted nine bids. It sold for $76.8 million, or $95 psf ppr.

In February, a neighbouring plot attracted double the number of bids and sold for $41.4 million, or almost $157 psf ppr.

But this price spike is location-specific, said Mr Tan.

He said land sites in suburban locations may not see as much price gain compared to more mature industrial estates like Ubi.

This is because investors may baulk at taking up spaces in newer industrial estates where it can be difficult for them to find tenants for their properties, he said.

However, other factors, such as the accessibility of public transport networks, would also affect prices.

Recent statistics from the URA show that prices of multiple-user factory space climbed 8.6 per cent in the first three months of this year.

This was an improvement compared to the 6.3 per cent increase seen in the last quarter of 2010.

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