Tuesday, July 3, 2012

Sims Drive freehold industrial plot up for sale asking $48-50m

Business Times: Tue, Jul 03
A FREEHOLD, landed, light industrial factory located at the junction of Sims Drive and Lorong 17 Geylang is up for sale by public tender, with an indicative price tag of between $48 million and $50 million.

The 34,912.7 square feet site at 53 Lorong 17 Geylang has a gross plot ratio of 2.5, which translates into a price of $550-$573 per square foot per plot ratio (psf ppr), based on the indicative price.

No development charge is payable for the redevelopment of the site, which is zoned for Business 1 use - which includes clean industry, light industry, warehouse, public utility and telecommunication uses.

HSR Investment Sales, the marketing agent for the property, said that a brand new, high-tech, light industrial development with communal lifestyle facilities should yield 45 to 50 new strata-titled units averaging about 150 square metres (1,614.6 sq ft) or less, with a target selling price of between $1,000 and $1,200 psf. It also expects bidding to be "intense" for the site.

Said Jeffrey Goh, head of investment sales at HSR: "Bidding is expected to be intense for this light industrial factory site on the back of keen interest and high yielding returns expected from new freehold strata-titled industrial projects."

Market watchers note that the asking price is on the high side, even in the current booming industrial property market.

Said Nicholas Mak, SLP International's executive director: "The current factory is quite old, so the buyer will need to tear it down and develop a new factory. Under such circumstances, the buyer will have to sell the new development at more than $1,100 psf to make it worthwhile."

However, "the average selling price of new freehold, strata-titled developments in the area is still below $1,000 psf", added Mr Mak. "Around the Sims Avenue area, the average selling price is about $800-$900 psf."

He noted that a freehold industrial property also located along Lorong 17 Geylang changed hands at around $414 psf ppr in February - lower than what HSR is asking for.

Ong Kah Seng, R'ST Research's director, said that the price is "fairly high".

"The price they are asking for is in anticipation of further price increases but I wouldn't bank on that because that is not certain," said Mr Ong, adding that there is "uncertainty in further price movements given the recent context of substantial price run-ups". This is especially so given that the government has introduced new rules to keep prices in check, added Mr Ong.

"Buyers for en-bloc old freehold factories are thus likely to critically evaluate available factories up on sale, particularly on the purpose of the investment, estimating realistic but viable investment incomes amid the current uncertainty, and the possibility of competing future re-developments from ageing freehold industrial properties in the vicinity."

HSR's Mr Goh, however, noted that freehold light industrial strata units in new launch developments such as AZ@Paya Lebar "are moving upwards, transacting between $1,000 and $1,200 psf".

When completed, AZ will be located next to MacPherson MRT station - due to open by 2018 before AZ is completed.

Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
Email: marshe_inc@yahoo.com.sg
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)

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