TWO freehold industrial sites - at 18 Howard Road and 27 New Industrial Road, in the north-eastern part of Singapore - are for sale by tender at indicative prices of $30 million ($272 per sq ft per plot ratio) and $14 million ($278 psf ppr) respectively.

Charles Hoon, director of investment properties at marketing agent CB Richard Ellis, said the sites are zoned Business 1 under Master Plan 2003. This means 40 per cent of gross floor area can be used for purposes such as offices, showrooms or workers’ dormitories.

‘While industrial capital values and rents have recovered, industrial space still presents an attractive option, compared with office space, for businesses to relocate their backroom operations.’

The two sites are conveniently located and of regular shape, he said. And their freehold tenure is an ‘added advantage’.

The 18 Howard Road site is a 44,000 sq ft vacant plot in Macpherson Industrial Estate. The 20,000 sq ft 27 New Industrial Road is in the New Industrial Road cluster.

Separately, DTZ Debenham Tie Leung is marketing a 999-leasehold Good Class Bungalow (GCB) site in Yarwood Avenue. The 69,540 sq ft site, close to Binjai Park, has been put up for sale through an expression-of-interest exercise at an indicative price of $750-$800 psf.

According to DTZ, it has redevelopment potential to accommodate four GCBs. It now houses a single storey detached house with an outhouse, swimming pool and tennis court.

Shaun Poh, DTZ’s senior director for investment advisory services and auction, said: ‘This is a rarely available large plot of land in a prime location, offering a myriad of possibilities.’

Recent transactions of GCB land in the area include sites on Kilburn Estate for around $860 psf and Binjai Park for around $850 psf, he said.

Source : Business Times - 6 May 2008

Temasek unit wraps US$600 million first close of new India-China fund

Mapletree Investments’ total asset size, comprising assets under management as well as on its own balance sheet, has nearly doubled to around $10.5 billion - inclusive of the recently announced acquisition of a $1.7 billion portfolio from JTC Corp - from $5.6 billion a year ago.

In a year’s time, it could grow further to $15 billion-$20 billion, Mapletree Investments CEO Hiew Yoon Khong told BT in a recent interview.

In the pipeline: Mapletree Business City, with 1.7 million sq ft, will come up next to PSA Building. Both assets are headed for Mapletree Commercial Trust

The increase will come largely from new private funds the fully-owned unit of Temasek Holdings is starting, including the US$1.5 billion-US$2.0 billion Mapletree India-China Fund (MICF) focusing on development and opportunistic redevelopment of real estate in the two mega markets. ‘This fund will invest in office, retail and residential property,’ Mr Hiew said.

The first closing, which has just been completed, has raised US$600 million, contributed equally by Mapletree and an international institutional investor that has declined to be named.

The fund’s second closing, slated for July, will also see Mapletree and the investor putting in US$200 million each, with another US$500 million to US$1 billion to be subscribed by third-party investors.

MICF has secured two seed investments in China. One is a residential and retail development named Future City in Xi’an’s Beilin District. The project has a total development value of $196 million and will span almost 1.56 million sq ft in gross floor area. Future City will have four residential towers and a nearly 400,000 sq ft mall to be named VivoCity Xi’an. Construction began in March last year and the development is slated for completion by July 2010. The targeted opening date for the mall is October 2010.

The second seed investment for MICF is an existing office block in Beijing’s Central Business District with a gross floor area of around 400,000 sq ft and an investment value of about $165 million. Upon completion of the acquisition in June 2008, an anchor tenant will lease 35 per cent of net lettable area. ‘We expect to seal a third investment in China soon for MICF - a retail and serviced apartment development in Guangzhou,’ said the 46-year-old former investment banker.

As for India, the fund has identified two investments in Bangalore - an office and residential project, and a pure office development.

Over the next 12 months, Mapletree also expects to start sequel funds to the Malaysia-focused CIMB Mapletree Real Estate Fund (CMREF) and the Mapletree Industrial Fund (MIF). The latter has so far bought some $300 million of non-warehouse industrial properties in Singapore, Malaysia and China. ‘For CMREF 2, we are targeting to raise about RM1 billion (S$430 million); CMREF 1’s RM500 million is almost fully invested,’ Mr Hiew said.

The group has held back plans to float more real estate investment trusts or Reits in Singapore because of unfavourable financial market conditions. One of these is the Mapletree Commercial Trust, which will hold about $3 billion of Mapletree’s Singapore assets in the HarbourFront and Alexandra Road areas. ‘With the deferment, we’ve been focusing on growing the net income of the initial assets planned for the commercial trust and working on building a strong pipeline of assets for possible acquisition by the trust,’ Mr Hiew said.

‘We’ll launch the trust when the market stabilises, hopefully before the end of the year,’ he added.

The centrepiece of the trust will be VivoCity, valued at about $2 billion. Other assets are likely to include nightspot St James Power Station, HarbourFront Centre, PSA Building and Merrill Lynch HarbourFront, which is slated for completion in the third quarter of this year.

The future acquisition pipeline for the trust includes two projects currently under construction - Mapletree Anson, a 19-storey Grade A building at Anson Road/Enggor Street slated for completion in Q3 2009, and Mapletree Business City, which which is expected to be ready in the second half of 2010.

The latter project is being built on the site of the former Alexandra Distripark (Blocks 1-3) and on an adjacent plot at Alexandra Terrace. ‘This will be a modern business campus with about 1.7 million sq ft net lettable area (NLA) comprising an office block and three business park blocks with amenities like a 350-seat auditorium, big function rooms. We’ll have a foyer for cocktails, gym with lap pool, even a childcare centre and convenience store, plus roughly 1,100 carpark lots,’ Mr Hiew said. The development will also have a foodcourt and al fresco-style restaurants.

So far, two tenants, including a financial institution, have leased a total of about 200,000 sq ft. Mapletree Business City will be integrated with Mapletree’s adjacent properties - The Comtech and PSA Building - to form the group’s Alexandra Precinct assets. PSA Building will be directly connected to Labrador MRT Station under the Circle Line opening in 2010.

As for Mapletree Anson, with about 325,000 sq ft NLA, about 40,000 sq ft has been leased so far. ‘The building’s completion in Q3 2009 will be ahead of the completion of the first phase of Marina Bay Financial Centre,’ Mr Hiew noted.

Plans to float Embassy Reit here - in partnership with India’s Embassy Group - have also been put on the backburner as structuring issues relating to changes in Indian laws on foreign funding and consequential tax issues are being ironed out first. The proposed Reit will hold business parks in Bangalore.

Source : Business Times - 5 May 2008

65,000 sq m plant will be 3M’s most advanced outside the United States

TECHNOLOGY-BASED company 3M has pumped in some US$200 million to set up a manufacturing plant in Singapore that will produce coatings for film-based products used in commercial, electronic and automotive applications.

These products include films that are coated onto car windows and interior glass panelling, helping to reduce the amount of ultraviolet rays and heat that passes through them, said Jay V Ihlenfeld, 3M Asia-Pacific senior vice-president.

‘We will also develop new products at the site, prototypes which we’ll (let our customers) sample, and scale them into full production,’ he said.

‘Going forward, we would like to expand the capabilities and the different technologies that we practise on the site to create new products for our customers.’

He added that some 250 engineering jobs will be opened up once the manufacturing plant is completed, which is expected to be by mid-2009.

Frank Sommerfeldt, manufacturing and engineering manager for 3M Singapore, said that the 65,000 sq m plant will have a ’substantial’ capacity and will meet the demands of 3M customers in South-east Asia, a market that has been growing at double digits for the company.

‘The plant will be 3M’s most advanced film coating facility outside the United States,’ he added.

3M is one of the 30 Dow Jones Industrial Average companies and is headquartered in the United States. It produces a range of items for the consumer, electronics and communications, and healthcare industries, among others, and its trademark brands include Scotch, Post-it, Nexcare and Scotch-Brite.

The company set up a sales and marketing operation centre in Yishun in 1966, and a manufacturing facility in Woodlands which produces flexible circuits and adhesives.

Dr Ihlenfeld said that the company chose to set up the plant in Singapore as the Republic presents a good business environment for the firm.

‘For a high-tech company like 3M, Singapore has many important advantages: a high quality workforce, well-educated people, outstanding scientific institutions, intellectual property and probably the most important - political stability and a government that helps companies make investments,’ he said, adding that 3M has been working with the Economic Development Board and JTC Corporation in setting up the plant.

Source : Business Times - 3 May 2008

23% of firms cited poor business as a factor for termination: JTC

TERMINATION of leases of JTC flatted-factory space, which is supported by manufacturing and services, hit 37,000 sq m in the first quarter of 2008 - 22 per cent higher year on year and 14 per cent higher quarter on quarter.

According to JTC’s quarterly facilities report for Q1, gross allocation of flatted-factory space, at 63,100 sq m, was 9 per cent down quarter on quarter but 122 per cent up year on year.

Net allocation was positive for a fourth straight quarter, though growth, at 28 per cent, was lower than in the preceding quarter.

JTC’s report also shows that 23 per cent of companies cited ‘poor business’ as a factor for termination, up from 7 per cent in Q4 2007. Only 35 per cent cited ‘consolidating operations’, compared with 54 per cent a quarter earlier.

Termination of ready-built facilities, which include flatted factories, increased 13 per cent year on year to 51,100 sq m.

But net allocation of ready-built facilities was six times higher year on year at 38,400 sq m, though this was almost 50 per cent down from the preceding quarter.

Overall occupancy increased 1.3 percentage points, raising the overall occupancy rate for ready-built facilities to a record 93.9 per cent.

Net allocation of technopreneur increased a modest 100 sq m in Q1. Demand was 12,900 sq m, while supply was unchanged at 15,100 sq m.

Gross allocation of business park space was 5,800 sq m, or 19 per cent lower year on year. Termination was 2,500 sq m, or 2 per cent lower year on year. As a result, net allocation was 3,300 sq m.

Gross allocation of standard factory space rose to 10,500 sq m while termination was flat at 2,300 sq m, resulting in net allocation of 8,200 sq m.

For stack-up factory space, demand and supply remained largely unchanged in Q1. Net allocation was 800 sq m. Gross allocation was 9,700 sq m while termination was 8,900 sq m.

Net allocation of prepared industrial land was 8 per cent lower quarter on quarter but 20 per cent higher year on year.

A larger proportion of gross allocation of prepared industrial land in Q1 was for manufacturing and supporting sectors.

The service and chemical sectors contributed 59 per cent and 22 per cent respectively to total gross allocation.

Source : Business Times - 30 Apr 2008

JTC has achieved a record occupancy level for its ready-built facilities in the first quarter of 2008.

Net allocation was 38,400 square metres, six-fold higher than the same period last year.

In its quarterly report, JTC said this helped to boost the occupancy level for ready-built facilities by 1.3 percentage points to 93.9 percent.

Termination level, however, has gone up as well - to 51,100 square metres in the first quarter of this year, compared to 45,300 square metres in the first quarter of 2007.

However, the net allocation for prepared industrial land remained strong - at 114.9 hectares - due partly to the general expansion across the manufacturing sector for 2007.

Looking ahead, more ready-built spaces are expected to come on stream with Phase 2 construction of Fusionopolis, which is set to be completed by the third quarter of 2010. - CNA/ms

Source : Channel NewsAsia - 29 Apr 2008

WITH probably less than 350 completed office and industrial buildings in Singapore available for sale on a strata basis, transaction volumes have been steadily rising with more investors seeing an upside.

In a White Paper, Colliers International notes that since 2006, the strata office sector saw sales transactions rise 59.1 per cent from 2005 levels while the corresponding rise for the strata industrial sector was 49.6 per cent.

By 2007, the office sector chalked up total annual sales of 595 transactions, a 117.2 per cent rise compared with 2005.

The industrial sector, on the other hand, saw 1,227 sales transactions in 2007, up 81.8 per cent from 2005.

While Colliers does say that some of the purchases were by end-users, it also believes that investors were drawn by the attractive net rental yields offered by these properties. This can range between 5 and 7 per cent.

Residential properties, however, offer net yields of 2.5 to 4 per cent.

‘Judging from the caveats lodged for office and industrial properties, signs of interest in office and industrial properties started showing as early as 2006 when their capital values were at or close to rock bottom,’ added Colliers.

Besides end-users and investors, Colliers believes there were buyers who bought units in ageing developments (particularly offices) with collective sale potential in the hope of reaping a windfall some time in the near future.

Examples of developments which were popular with such investors in the last two years include Textile Centre and Golden Mile Complex, both in the Beach Road area.

‘With the office supply crunch likely to persist in the next two years, the industrial sector will continue to enjoy robust spillover demand from the office sector on top of demand from the mainstream manufacturing industry,’ added Colliers.

Colliers also highlighted that, compared with the mid-1990s peak, capital values of office and industrial properties as at end-2007 were still some 27.5 per cent and 33.7 per cent lower. ‘The sectors, thus, still hold immense upside potential in rents and capital values,’ Colliers added.

Colliers said that the bulk of available strata office and industrial properties are likely to be more than 20 years old.

Strata office buildings that have seen high transaction volumes since January 2006 include Chinatown Point, International Plaza and People’s Park Centre.

Strata industrial buildings that have seen high transaction volumes include E-Centre @ Redhill, Eunos Technolink and Ubi Tech Park.

Source : Business Times - 23 Apr 2008

A S$300 million warehouse store will be open in Jurong East in the last quarter of 2009. The company behind the Big Box project, TT International, said the Jurong warehouse will be its flagship store.

Sitting on a 5.6-hectare site near the Jurong East MRT station, the outlet will be as big as 27 football fields put together with a total gross floor area of 120,000 square metres.

About 30 per cent of the space (34,000 square metres) will be set aside for retail, and the rest will be used for warehousing and offices.

The mega store will house a wide range of consumer electronics products, furniture and a hypermarket. It will also provide renovation and interior design services.

TT International said being mega will translate into savings for consumers.

Director of TT International Julia Tong-Sng explained: “We are an international trader, importer and distributor, so we have the advantage in costing.”

When completed, the Big Box outlet is expected to generate over 600 jobs, which the company said will mostly go to Singaporeans.

TT International added that it hopes to tap into the pool of people living in Jurong, including housewives and semi-retired individuals, to overcome the problem of manpower shortage.

Up to three million people are expected to visit the store each year. TT International said it plans to organise exhibitions and cultural shows to draw the crowds in.

The company also aims to work with SPRING Singapore and retail institutions to help HDB shops around the area level up.

Ms Tong-Sng said: “We intend to organise, at least twice a year, (an event) to provide free space for the HDB shop owners… to display their products and make some sales, so that they can also participate in this kind of big-box concept. At the same time, we will also work with SPRING to provide training.”

TT International, which has operations worldwide, also hopes to bring the concept of big-box store to Vietnam and Cambodia. - CNA/ac

Source : Channel NewsAsia - 7 Apr 2008

Office space crunch also lifts high-tech space occupancy to 94.1% at end of Q1

The average occupancy rate for business parks has hit a five-year high, crossing the 90 per cent mark.

According to a report by CB Richard Ellis (CBRE), the occupancy rate grew from 89.4 per cent at end-2007 to an estimated 90.2 per cent at end-March 2008, exceeding 90 per cent for the first time in five years.

This was attributed to the current tight availability of office supply in the CBD which saw financial institutions like Standard Chartered Bank, Credit Suisse and Citibank relocating part of their operations to Changi Business Park.

The office space crunch also pushed the average occupancy rate for high-tech space up by 1.3 per cent quarter on quarter to 94.1 per cent at the end of first quarter 2008.

CBRE director of industrial and logistic services Bernard Goh pointed out, however, that while the average occupancy rate for business parks is expected to grow, it would be at a ‘less robust pace compared with high-tech space’.

‘This is due to the healthy pipeline of upcoming business parks in the next four years,’ he said.

Mr Goh said some six million square feet of business parks are expected to be completed from 2008 to 2011. In comparison, only 1.5 million sq ft of high-tech space is expected to come onstream in 2011, explained Mr Goh.

Correspondingly, Mr Goh expects the growth in rental for high-tech space to continue to grow at a healthy pace.

Average monthly rent for high-tech space rose 7.3 per cent quarter on quarter to $2.95 per square foot (psf) by end-March, up from the 5 per cent quarter on quarter increase seen in the first quarter of 2007.

DTZ Debenham Tie Leung also sees more business park development projects in the pipeline.

In a report released yesterday, it said that the potential supply of business park space was 2.7 million sq ft as at end-2007, 10 per cent of total potential supply of private industrial space.

DTZ also noted that average monthly gross rents for business/high-tech industrial space rose 7.7 per cent quarter on quarter to $4.20 psf per month.

Generally, private industrial stock increased marginally by 0.7 per cent quarter on quarter to 299 million sq ft as at end-2007, with about 1.69 million sq ft of net lettable area of new private industrial space added in 4Q 2007, said DTZ.

However, DTZ has projected 7.13 million sq ft of new supply of private factory space for 2008. Subsequently, it is projecting a further 8.35 million sq ft, 2.77 million sq ft and 1.38 million sq ft for 2009, 2010, and 2011 respectively.

Source : Business Times - 4 Apr 2008