Three more than the sites it put on the market for the first half of 2007.

The government yesterday said that nine sites are on offer under its industrial land sales programme for the second half of this year - three more than the sites it put on the market for the first half of 2007.

The nine sites will together give about 3.74 million square feet of industrial space, up from the 2.79 million sq ft offered in the first half of the year.

However, the increase in the space offered under the industrial land sales programme is not as great as that seen for residential space, market observers said. The number of residential sites on offer through the confirmed list increased from two to eight from the first half of 2007 to the second half.

‘This could indicate that the government may see that the industrial property market is fairly stable with sufficient supply in the short and medium term,’ said Nicholas Mak, Knight Frank’s head of consultancy and research.

As with the first half of the year, just two industrial sites - this time, a 5.1 ha site in Sin Ming Lane and a 2.1 ha site in Jalan Tepong - will be offered under the confirmed list. Both sites are expected to see strong interest.

The Sin Ming Lane plot has the potential to yield a large gross floor area of about 1.37 million sq ft. Potential bidders include car companies and/or workshops because of nearby vehicle inspection centres, said Li Hiaw Ho, executive director for research at CB Richard Ellis (CBRE). ‘The unit price for this plot might be lower as a result of the large land area,’ Mr Li said.

The Jalan Tepong site, on the other hand, is interesting because it has a lease of about 23 years, shorter than the usual tenure of 30 or 60 years. The tenure for the site is only until 2030 to dovetail with future developments in that area. The plot might also fetch a lower price because of the unusual tenure, Mr Li said. ‘Some fresh food companies might bid for the site as food manufacturing is permitted and the site is near to Jurong Port.’

The new reserve list has seven sites, three more than the previous reserve list. The seven sites can yield a total maximum gross floor area of 2.05 million sq ft, less than the 2.40 million sq ft that the four sites on the previous reserve list could yield.

Despite the smaller floor area, the reserve list for the second half seems to be offering a variety of locations, Mr Mak said.

The take-up for factory space was 7.64 million sq ft in 2006 and 1.39 million sq ft in the first quarter of 2007. The market should therefore be able to absorb the gross floor area that can potentially come from the sites on the current reserve list, observers said.

CBRE said average rents for all industrial space increased in the second quarter of 2007, with high-tech space rising the fastest.

Average rents for high-tech space rose 11.9 per cent from $2.10 per square foot (psf) in the first quarter to $2.35 psf in Q2 - the highest quarterly increase in the past five years.

‘The limited supply of office space coupled with rising rents encouraged many qualifying companies to look to high-tech properties to meet their needs,’ CBRE said. ‘Further rent increases for high-tech space during the second half of the year is expected as demand for offices is unlikely to let up while supply of office space will still remain tight.’

Source: The Business Times, 28 June 2007