Monday, July 2, 2012

Some gaps in data for industrial property

Straits Times: Mon, Jul 02
INVESTORS flooding into Singapore's once unglamorous industrial property sector face some gaps in the data, at least for now.

The Urban Redevelopment Authority (URA) said that some transactions may not show up on its Realis website even if caveats are lodged. The closely watched quarterly price index tracking the sector is based on Realis data.

But the URA says it is working with other agencies to plug the gaps in the current data.

Analysts say both prices and volumes of industrial property sales are likely to be higher than these official figures indicate.

One factor for this could be buyers who do not use bank loans and so choose not to lodge caveats, which occurs across all property sectors. But the problem is compounded in the non-residential sector because even when caveats are lodged, not all transactions make it to Realis.

This is because if the floor area of a unit - not required for the purpose of lodging a caveat - is not submitted, and URA cannot obtain this information from other sources, these transactions will not be included.

Such transactions are left out because users of the information will not be able to compute the price per unit area - for instance, the per sq ft (psf) price - for meaningful comparison with other properties, the URA spokesman added.

Realis lists transactions since 1995, but these gaps were less of an issue in the past as there were not as many strata-titled industrial units being pushed out. This issue was made more pressing only in the last couple of years, as investors charged into the sector in reaction to several cooling measures in the residential sector.

Investors have been attracted by the higher yields of 4 to 8 per cent and the lower price point.

But experts say that these casual investors might not be equipped with sufficient information to make purchase decisions.

Prices of factory and warehouse space skyrocketed 27 per cent last year, based on URA data. But anecdotally, prices might have gone up by 5 to 10 percentage points more, with new sale volumes 'significantly higher', noted Savills Singapore research head Alan Cheong.

For instance, only 46 new sale caveats were found on the Realis website for the whole of last year.

But experts say the figure should be much higher, even after discounting buyers who choose not to lodge caveats.

Another example is that sales of industrial project Oxley Bizhub in the Ubi area - which set a benchmark price for the estate and sold at least 200 units last year - cannot be found on Realis.

The issue affects mostly new sales of strata-titled industrial, office and retail sectors, as full details of uncompleted projects are harder to obtain.

This issue does not affect residential property because URA is able to obtain the extra information from other sources such as its monthly survey of developers.

URA is aiming to do something similar for industrial property. Its spokesman said: 'We are currently working with other government agencies to try to obtain the necessary information for industrial property sale transactions.'

He added the aim of showing data on property sales in Realis is to enhance price transparency.

Savills' Mr Cheong said: 'Especially for valuers and marketing research, we have a problem because there are not enough transactions to reflect current market conditions so it's difficult to know what's the price-to-market.'

EL Development managing director Lim Yew Soon said the firm does not rely just on URA data when making decisions on land bids, but also taps marketing agents on the ground to get a better sense of sentiment and prices...

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