Business Times: Fri, Dec 30
(SINGAPORE) Those hoping to make a quick buck by investing in small strata industrial units are in for a reality check.
The government has taken steps to make industrial land affordable for genuine industrialists. The move may also stop froth from spilling over to industrial property from the recently-cooled residential sector.
It will rein in investors who have been making industrial space too costly for genuine end-users.
The Ministry of Trade and Industry is stepping up land supply for the Industrial Government Land Sales Programme for the first half of 2012 to a total of nearly 24 hectares (through both confirmed and reserve lists) - up from 16 hectares in the current H2 2011 slate.
And for industrialists seeking to build their own customised premises at affordable prices, MTI is offering 18 smallish sites located off Tuas South Avenue 12 on 19-year tenure - shorter than the typical 30 and 60-year tenure for industrial plots on the GLS Programme.
More controls will ensure that strata industrial developments are built to industrial property specifications - and not snapped up by investors looking for small units. The conditions will apply for GLS parcels from Jan 1, 2012.
For selected sites near MRT stations, for example, strata subdivision of an industrial development will not be allowed for the first 10 years after the project is completed. For strata sub-divisions after that period, developers must adopt a minimum strata unit size of 150 square metres gross floor area (GFA). The thinking is that genuine industrialists will require units of at least this size, while smaller units might be snapped up by investors or touted for unauthorised office use.
This condition was already stipulated for a reserve-list plot near Aljunied MRT Station in the current H2 2011 slate when it was made available for application last month.
This plot will now be transferred to the confirmed list of the H1 2012 GLS slate. Three new plots will also fulfil the same condition. Two sites are near Tai Seng MRT Station (one each in the confirmed and reserve lists) while the third is a confirmed list plot at Bukit Batok St 23.
The minimum 150 sq m strata unit size shall also apply to multiple-user industrial developments on sites that don't have the initial 10-year bar on strata subdivision. Even if the developer holds the project for rental income, units cannot be under 150 sq m, so long as it's a multiple-user industrial project.
MTI's spokesman said: 'We have assessed that 150 sq m is the minimum working space that true industrialists require.'
Meanwhile, all multi-storey industrial developments will have to meet minimum requirements for goods lifts and loading bays.
Units in the industrial GLS project will also have to comply with minimum technical specs for an industrial project with regard to floor loading, floor-to-ceiling height and electrical provision. Industrial market watchers told BT that some recent strata industrial projects do not comply with such standard industrial specs. In at least one instance, a strata industrial project does not have a single cargo lift.
Marketing agents often tout strata industrial units to potential buyers for office use - even though such use is unauthorised. This has drawn investors to the strata industrial market and pushed up prices.
Many strata industrial projects on the market now have units mostly of 90-100 sq m. 'This is too small for industrial use. In the past few months, investors have found 100 sq m industrial units a good alternative (to residential investment) as the lump sum is affordable. So raising the minimum size for strata industrial units to 150 sq m will help take away this pool of investors, who are pushing up prices,' said Lim Kien Kim, senior director (industrial) at Knight Frank.
Said MTI's spokesman: 'All the conditions are to better meet the industrialists' requirements and will benefit genuine end-user industrialists looking for premises, whether to rent or to buy.'
MTI's H1 2012 confirmed list will have 16 sites. Besides the eight Tuas plots on short tenure and below one hectare each, the other confirmed list sites are located in Mandai Link (2.2 ha), Tampines Industrial Crescent (3.88 ha), Bukit Batok St 23 (1.5 ha), Serangoon North Ave 4 (0.8 ha), Aljunied Rd, Tai Seng Link, Kaki Bukit Rd 5/Ave 6, and Yishun Ave 9.
Welcoming MTI's announcement, Mr Lim said: 'I've heard enough cries from real users of industrial space that rents and prices have gone up to such a ridiculously high level that they find it difficult to do business here.
'Especially in the past 12 months, the industrial property market has become more speculative, like residential.'
Source: Business Times © Singapore Press Holdings Ltd
Martin Koh/ Sherry Tang