SINGAPORE: Rising industrial rents and land prices have not dented Singapore's competitiveness against other countries in the region, said Minister for Trade and Industry Lim Hng Kiang.
He said the government is closely monitoring both industrial rents and land prices.
Mr Lim was replying to a question by MP for Ang Mo Kio GRC Inderjit Singh in Parliament on Friday. He had asked what are the ministry's plans to keep industrial land affordable for SMEs in Singapore.
Mr Lim said industrial rents rose 30 per cent in the past three years and industrial land prices notched up 60 per cent in the past two years.
Compared to the sharp increase in industrial land prices, he said industrial rents remained flat from 2002 to 2007, but started picking up since then.
Given that most small and medium enterprises (SMEs) opt to rent industrial spaces instead of buying them, Mr Lim said the government is monitoring the industrial rents carefully.
When asked about the proportion of industrial space held by foreign investors, Mr Lim said buyers are not required to declare whether they are foreigners or locals and that the government may have to start collecting such data.
Mr Inderjit Singh also raised concerns that the purchase of industrial properties for investment may be pushing industrial rents higher.
In the past year, he said Singapore ranked third most expensive in terms of prime industrial land globally alongside Tokyo - making Singapore too expensive for companies big and small to remain competitive in the city state.
Mr Lim replied: "We track our competitiveness very closely, in terms of our (industrial) land prices and land rentals vis-à-vis alternatives in the surrounding countries and suite of competitive locations.
"So we continue to track, and we continue to feel that our (industrial) land prices and rentals are competitive based on these competitive locations that we are tracking."
At the moment, there are no rules that restrict the purchase of industrial land for investment purposes as Mr Lim said introducing such restrictions could have significant impact on businesses.
With more SMEs opting to rent industrial premises instead of purchasing them, Mr Lim said long-term investors play a key role in renting out the space they buy to industrialists.
Mr Lim added: "Allowing investors to participate in the industrial property market provides options for industrialists, reduces the upfront capital costs for businesses and keeps rentals competitive."
To make industrial land more affordable to SMEs and industrialists, Mr Lim said the government will release sufficient land through the Industrial Government Land Sales programme, adding that the government has started releasing shorter-tenure industrial land for SMEs with customised needs.
Currently, about 60 per cent of industrial spaces in Singapore are rented out, while 40 per cent are owner occupied.
Of the 60 per cent industrial spaces that are being rented out, Mr Lim said 15 per cent come from JTC and HDB, while another 17 to 18 per cent come from small owners. The remaining 27 per cent are the big Real Estate Investment Trusts (REITs) and developers.
Mr Lim said there are times that the government allows 60 per cent of factory space for industrial use and 40 percent for use in ancillary and related office functions.
He added that the government will take action against the misuse of industrial spaces - which may have contributed to the increase in industrial land prices and rents.
Mr Lim said: "There could be infiltration in the ancillary uses being sublet to other non-industry use. And on this, we are taking enforcement action and deterring people from creeping, allowing such non-industrial users to be allowed to be crept in."
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