Net allocation of JTC ready-built facilities turns positive in Q4

Healthy demand for industrial properties expected in 2010, say analysts

JTC Corp yesterday said that net allocation of its ready-built facilities (RBF) returned to positive territory in Q4 2009. In the first three quarters of 2009, net allocation was negative as termination outstripped gross allocation.

But net allocation for the whole of 2009 was still negative as the group’s properties were hit by weak global economic conditions.

Net allocation was negative 24,800 square metres in 2009. By comparison, net allocation was a positive 90,700 sq m in 2008.

But in Q4, net allocation was a positive 2,100 sq m. Net allocation was negative 8,900 sq m in Q1, negative 7,800 sq m in Q2 and negative 10,300 sq m in Q3.

The occupancy level at the RBF also rebounded slightly in Q4, climbing up 0.1 percentage point from Q3 to end 2009 at 97.2 per cent.

Year-on-year, the occupancy level rose by 0.4 percentage points. The drop in demand over the year was offset by lower supply as stock was retired for product renewal, JTC said.

Analysts have said that the industrial sector here could see a turnaround this year.

‘A healthy demand for industrial properties is expected in 2010 and rents are projected to begin their upward climb in the second half of the year,’ said CB Richard Ellis in its Q4 2009 report on the Singapore market.

DTZ likewise predicted that the industrial market may see a turnaround in 2010 with rental decline easing off gradually and rents bottoming by the end of this year.

Within the RBF, the business park segment experienced the biggest year-on-year fall, with net allocation dropping to 1,100 sq m in 2009 from 48,300 sq m in the previous year.

However, the decline was from an exceptionally high base in 2008 which benefited from the completion and take-up of Fusionopolis Phase 1.

Fusionopolis phase 2A is currently under construction and is expected to be completed by 2014.

Net allocation for JTC’s prepared industrial land (PIL) managed to stay in positive territory in 2009. Net allocation for this segment came to 101 ha in 2009, compared to 200.9 ha in 2008.

The performance, which JTC said was ‘resilient’, was supported by a significant allocation in the fourth quarter of 2009 for the integrated yard facility in Tuas as well as steady take-up for Seletar Aerospace Park. Net allocation for Q4 2009 was 105 ha.

Overall, gross allocation of PIL fell 34 per cent to 175.6 ha in 2009 while termination increased 17 per cent to 74.7 ha. A large proportion – 44.6 ha or 60 per cent – of the land terminated came from the manufacturing sector.

Within manufacturing, the electronics segment registered the highest termination with 23.9 ha given up, followed by the precision engineering segment with 7.3 ha terminated.

A total of 30.1 ha – or 40 per cent – of PIL termination came from the manufacturing related & supporting industries sector.

Source: Business Times, 18 Feb 2010