Friday, July 3, 2009

Three new sites on industrial GLS programme for H2

THREE sites have been added to the government’s industrial land sales programme for second-half 2009, which was launched yesterday by the Ministry of Trade and Industry (MTI).

The three sites have been added under the reserve list to continue to meet potential demand for industrial land, MTI said. This brings the total number of industrial sites on the reserve list to nine.
The confirmed list, on the other hand, remains suspended.

‘In view of current economic uncertainties, MTI will continue to suspend the confirmed list for the second half of 2009,’ the ministry said in a statement. ‘This will provide flexibility for the market to adjust supply in accordance with the current economic conditions.’

Market watchers said that the continued suspension of the confirmed list was expected. Using the reserve list only means the market will have the final say on when a site is released.

Under the reserve list system, the government puts up a site for public tender only if it receives an application from a developer who commits to bid for the site at or above the minimum price acceptable to the government.

‘This is in line with the government’s aim of letting developers decide if they are interested in a site and letting them trigger the sites they like,’ said Savills Singapore managing director Michael Ng.

The three new sites on the reserve list are at Woodlands Avenue 12, Kaki Bukit Avenue 4 and Ubi Road 1/Ubi Avenue 4. In addition, six sites from the first-half 2009 reserve list have been carried forward to the second-half list.

The nine sites on the reserve list have a combined area of about 19 hectares.

It is unclear if the demand for these will be strong, analysts said. Singapore experienced a sharp drop in industrial investment sales in the first quarter of this year, with only a few isolated transactions completed.

However, sentiment picked up in the second quarter. Data from CB Richard Ellis (CBRE) showed there were at least six investment transactions in the industrial sector in Q2 – totalling $58.9 million. Most of the buyers were end-users, CBRE said.

Singapore-listed real estate investment trusts (Reits), which bought up a significant amount of industrial property during the boom in 2007, are still holding back on acquisitions this year as dividend yields have increased significantly and it would be extremely challenging to make purchases that are yield accretive. Obtaining finance also continues to be difficult.

Source: Business Times, 3 July 2009

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