Mapletree fund acquires 2 industrial properties

MAPLETREE Industrial Fund Ltd is acquiring a factory building in Tech Park Crescent for $12.48 million, and has also bought a light industrial building at 19 Tai Seng Drive for $12.5 million.

In a statement, the company said it has signed a sale-and-leaseback agreement with Centillion Environment and Recycling for the three-storey Teck Park property.

The factory has a gross floor area of about 9,800 square metres and is located within the Tuas Industrial Estate, which houses a wide range of industries from bio-medical to food, manufacturing and warehousing industries.

Separately, the fund also bought a six-storey light industrial building, with a gross floor area of about 8,600 square metres.

Located in Tai Seng Industrial Estate, the building currently serves various functions such as a telephone exchange, mobile telephone switching centre and international gateway network management centre. StarHub is taking out a long lease on the property, the statement added.

Both properties will be managed by Mapletree Industrial Fund Management (MIFM) – a wholly owned subsidiary of Mapletree Investments.

Phua Kok Kim, CEO of MIFM, believes that these acquisitions will enhance the fund’s portfolio value given their choice locations and the ’strong demand for industrial space on the back of the continued firm growth of the manufacturing sector’.

Source : Business Times – 04 Sep 2007

Record $72 psf ppr bid for a 30-year leasehold industrial site

AN URBAN Redevelopment Authority tender at Kaki Bukit Road 3 yesterday drew seven bids, with a top offer of $72 per square foot (psf) of potential gross floor area – the highest-ever unit land price for a 30-year leasehold industrial site, according to CB Richard Ellis.

And this top bid, made by Eastpoint Development Pte Ltd, was a whopping 58 per cent more than the second-highest bid of $46 psf per plot ratio (ppr), which came from EL Development, a unit of Evan Lim & Co.

The top bid at yesterday’s tender worked out to nearly $5.7 million in absolute terms and the bidder, Eastpoint Development, is controlled by Lim Kim Hong and Lim Huixing.

The Lims also took part in Wednesday’s tender for the maiden transitional office site next to Newton MRT Station, bidding under MV Land Pte Ltd, which entered the fourth-highest bid at that tender.

The Kaki Bukit site is zoned for Business 1 use, which means it can be developed for a range of clean and light industrial, and warehouse use.

Colliers International director (industrial) Tan Boon Leong reckons the 131,917-sq-ft plot, which has a plot ratio of just 0.6 and a triangular shape with a narrow pointed tip at one end, is optimally suited for development into single-storey (with mezzanine floor) terrace factories or two/three-storey terrace factories. ‘The plot can be built into about 23 single-storey (with mezzanine floor) units with an average saleable area of 3,500 sq ft per unit,’ he added.

‘The break-even cost to the developer could be around $150-$180 psf of saleable area and it could sell the units for about $220-230 psf. It should be able to command a premium for such factories, despite the 30-year leasehold tenure, because there’s a dearth right now for single-storey terrace factories in the Paya Lebar, MacPherson and Kaki Bukit areas,’ Mr Tan added.

CB Richard Ellis executive director Li Hiaw Ho said the Kaki Bukit site can be developed into a high-tech industrial building.

Yesterday’s tender also drew bids from KNG Development, Sin Hong Hwa Pte Ltd, Union Contractors (Singapore), Eng Seng Lee Construction Co and Soilbuild Group. Soilbuild was the lowest bidder at $2.44 million or $31 psf ppr. It was also the lowest tenderer at Wednesday’s tender for the 15-year leasehold transitional office site next to Newton MRT Station.

CBRE’s Mr Li noted that the high number of bids received as well as the robust prices for the industrial site indicate continued strong demand among developers and manufacturers.

‘It is not surprising as occupancy rates for industrial space are still on an upward trend. Industrial rents are also on a healthy growth path, driven by a buoyant manufacturing sector,’ he added.

Source : Business Times – 24 Aug 2007

Jurong Island is gearing up for more business

Singapore is taking steps to better cater to more petrochemical investments and new plant facilities like the billion dollar crackers of Shell, and also possibly ExxonMobil.

It is beefing up infrastructural and logistics support on Jurong Island (JI), including having first-time dormitories housing up to 12,000 workers and reversible traffic flows into, and out of, the island at peak times.

‘We expect a doubling in the current 30,000 workers going to the island daily, to as many as 60,000 to 65,000, half of whom will be construction workers needed during the building peak starting in the second half of next year,’ said David Tan, director of JTC Corporation’s Specialised Parks Development Group.

Shell started building its estimated US$3 billion cracker in March, while ExxonMobil is expected to make its final investment decision any time now on its estimated US$4 billion second cracker complex.

‘JI in the next three to five years will be a hive of activity as the petrochemical crackers and associated downstream plants are built. We recognise that there will be challenges, that’s why we are planning forward to prevent any construction bottlenecks,’ Julian Ho, Economic Development Board’s executive director of energy, chemicals and engineering services said.

The two were briefing media on the upcoming measures at JI meant to boost logistics support like ease of transportation and a tightening up of security, as well as to facilitate building of upcoming projects.

Other mega projects on JI include the first phase, $700 million Jurong Rock Cavern (JRC) offering 1.47 million cubic metres of oil storage, which is expected to be operational in 2010.

A US$500 million liquefied natural gas (LNG) terminal on the south-western part of JI is also targeted to be built by 2012.

In total, JTC will spend over $1 billion (including the $700 million on JRC) on infrastructural projects on JI in the coming years.

Among the infrastructural improvements are:

Following government’s recent raising of the dependency ratio for the construction and process industries from 1:4 to 1:5 (local:foreign workers) in April, JTC will now allow new worker dormitories to be built for the first time on JI. These will not be done by JTC but by the companies working on construction projects there, like the new chemical plants.

To further beef up the security of JI – gazetted as a Protected Area in 2001, following the 9-11 terror attacks in the US – JTC is spending up to $10 million to expand the island’s checkpoint to cater to the projected growth and increase in traffic flow. It has just called a tender for the construction of two more security towers on the island.

Work on the first phase checkpoint expansion has started and is targeted for completion this year-end, while the entire upgrading will be done by mid-2008.

The departure hall will also double as the arrival hall during the peak hours. After the upgrading, the average wait should not exceed 10 minutes on most days. There will also be reversible traffic flows on the Jurong Pier flyover leading in and out of JI in the morning and evening peak hours respectively to speed up the expected heavy traffic flow.

JI is currently served by two jetties at Banyan and Sakra which, among other purposes, allow contractors to load or unload equipment. ‘If there is a need, we will allow for more jetties,’ JTC’s Mr Tan said to a BT query that some investors were keen to have more jetties to facilitate construction of their projects.

Generally however, JTC feels that there is sufficient jetty capacity presently to cater to immediate future demand. Currently, JI – formed by the amalgamation of seven islands,and comprising 2,700 hectares – has drawn over 90 petrochemical/oil companies which have invested a total $27 billion and employ 12,000 workers. Further reclamation should see JI grow to its targeted 3,200 ha size.

Source : Business Times – 6 Aug 2007

Strong demand for ready-built facilities

Net allocation of JTC’s ready-built facilities (RBF) increased 770 per cent in the second quarter of this year to 58,200 sq m, from 6,700 sq m in Q1. And the overall occupancy rate for RBF increased one per cent to 89 per cent.

The RBF segment includes business park, technopreneur, flatted factory, standard factory and stack-up factory space.

JTC said the segment’s strong performance was supported mainly by increases in net allocation of flatted factory and standard factory space, which contributed 48 per cent and 38 per cent of the total net take-up respectively.

In terms of industries, precision engineering accounted for 19 per cent of demand for flatted factory space, while general manufacturing accounted for 17per cent.

Services, which include wholesale and retail and information/communications, accounted for 50 per cent of the gross allocation of flatted factory space.

Savills Singapore’s director of industrial business space Dominic Peters reckoned the spike in allocation could also have been due to the migration of businesses from Alexandra Distripark.

Earlier this year, Mapletree said it would demolish three existing industrial blocks at Alexandra Distripark with a gross floor area of around 1.6 million sq ft and build four new blocks with an estimated 1.96 million sq ft of business park space.

Interestingly, JTC’s data reveals that demand and supply for business park space – which is said to benefiting from the spillover from the CBD – remained stable over the quarter, with net allocation at 700sq m.

But Mr Peters pointed out that rents for business park space have increased about 20 per cent on average.

JTC said net allocation of prepared industrial land (PIL) dropped to 64.4 ha in Q2, from 95.7 ha in Q1.

It said the high Q1 figure was due largely to a sizable allocation to a petrochemical company on Jurong Island, which alone accounted for 50 per cent of total gross allocation of PIL.

Key segments that saw significant growth in Q2 included Tuas Biomedical Park and Wafer Fab Park, with net take-up rates of 19.9 ha and 16 ha respectively.

Source : Business Times – 1 Aug 2007

Soilbuild to develop business space for smaller firms

Small and medium enterprises (SMEs) can expect more business space choices by next year, following the successful tender for a JTC Corporation Tuas development site by property developer Soilbuild Group Holdings yesterday.

Located at Tuas Crescent, the 43-year leasehold development site is the largest piece of land awarded to Soilbuild so far.

It has a net lettable area of about 700,000 sq ft and will be developed into 15 factory units.

The project will be built as three clusters of two-storey factories, with medium-sized units ranging from about 34,000 sq ft to 43,600 sq ft. Each unit will have a private compound, 10 car park and three lorry park lots.

Targeted for completion by next year, the whole project will cost about $68 million. It will cater to engineering companies, supporting industries of the oil and gas, as well as marine clusters in the area, said Soilbuild in a press statement released yesterday.

“Our strategy has been to cater to the specific needs of SMEs and MNCs (multinational corporations) and we have designed the factories at Tuas to suit the needs of these sectors,” said Mr Low Soon Sim, executive director of Soilbuild.

Touted to be ecologically friendly, Soilbuild said the units would provide generous ventilation and natural lighting streaming in through jack roofs to reduce electrical consumption. They will also be equipped with auto sensors and regulators for water systems.

Depending on market conditions when the project is completed next year, Soilbuild expects the units to fetch between $100 to $150 per square foot.

Other similar projects by the company include the 15-unit Senoko Food Connection terrace factories for SMEs and an eight-storey Eightrium at Changi Business Park for MNCs.

Soilbuild is also involved in the luxurious residential project One Tree Hill Residence, where 25 of its 48 sold-out units have reportedly been bought over by United States-based investment fund Citadel for $41.7 million.

Source : Today – 24 Jul 2007

Tuas Biomedical Park 2 to cater to more drug makers

Singapore is preparing to attract even more drug makers here, with the development of a second manufacturing park in the western part of the island.

Industrial landlord JTC Corp said an additional 188 hectares has been set aside for newcomers to the Singapore biomedical sciences manufacturing scene. Called Tuas Biomedical Park 2, it is being developed at a total infrastructure cost of about $80 million.

‘To date, almost 90 per cent of the land in Tuas Biomedical Park 1 (TBP 1) has been occupied and reserved,’ said a spokesman from JTC, the developer of the area. ‘Given the robust growth enjoyed by Singapore’s biomedical sector and the projected demand for land from pharmaceutical and biotech companies, an additional 188 hectares has been developed as Tuas Biomedical Park 2 (TBP 2) to meet the needs of these companies.’

TBP 2 is next to TBP 1, an area of 183 hectares that was launched in 2000 as a world-class manufacturing hub dedicated to pharmaceuticals, biopharmaceuticals, biologics, vaccines and medical devices companies. Developed at an infrastructure cost of about $67 million, the purpose of TBP 1 was to co-locate pharmaceutical companies so as to bring about greater economies of scale.

JTC said clustering companies with similar needs in one area allows for operational synergies through the sharing of major key infrastructure, ‘while the companies enjoy the benefits of targeted and specialised management of the cluster’s niche requirements, as well as the opportunity for close interaction and fostering of community ties’.

Already, TBP 2 has attracted its first tenant, Abbott Manufacturing Singapore Pte Ltd, which is taking up 16 ha. It is setting up a $450 million plant, which will be completed by the end of next year. The plant will make powdered nutritional products for the global market.

Just as it has done for TBP 1, JTC will provide the basic key infrastructure of power, water, telecommunications, gas and sewers for companies at TBP2 to operate immediately. The new park will be flanked by the major roads of Tuas South Ave 3, Tuas South Ave 9 and Tuas South Ave 5.

Companies can choose to occupy the land by paying rent or opting for the upfront premium scheme.

The former requires companies to pay a monthly fee – the current rental rate is $9.39 per sq m a year – which is subject to revision annually.

For the upfront premium scheme, the company will pay a land premium for either a 30-year or 60-year lease, at $143 and $179 per sq m a year respectively.

TBP 1 is largely being taken up by global pharmaceutical firms, including Merck, Sharp & Dohme (MSD), Pfizer, Wyeth, Ciba Vision, GSK Biologicals, Novartis, Lonza Biologics and Genentech. MSD was the first tenant to move into TBP 1 in 1998, when the area was then part of the Jurong Industrial Estate.

Source : Business Times – 19 Jul 2007

Government releases 9 industrial sites for second 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 : Business Times – 28 Jun 2007

Soilbuild’s Eightrium draws MNC interest

PROPERTY group Soilbuild said yesterday its eight-storey Eightrium @ Changi Business Park is ready for occupation, having been granted a temporary occupation permit (TOP) three months ahead of schedule.

BT understands that some space has already been leased, after marketing began as early as March. Soilbuild said in its statement that the high-tech building, which has a net lettable area of 178,000 sq ft, has attracted strong interest from MNCs in the high-tech, research and development and knowledge-intensive sectors.

Property firms CB Richard Ellis (CBRE) and Jones Lang LaSalle (JLL) have been appointed joint leasing agents.

‘We have received many enquiries about the development, with several parties in various stages of negotiations,’ said CBRE, which started marketing the property in March. Eightrium is achieving an average rental rate of $3-$3.50 per sq ft (psf), it said.

Island-wide, median rents for business park space ranged from $2.79 to $3.70 psf in the first quarter of 2007, CBRE said.

‘Vacancy levels in the office sector have fallen dramatically and occupiers are searching for quality space to accommodate business growth,’ said CBRE’s executive director for office services Moray Armstrong.

‘It is apparent that fast-escalating rents in the tight office sector are encouraging occupiers to find solutions to help contain costs. This has certainly contributed to the surge of leasing activity at Eightrium,’ Mr Armstrong said.

Low Soon Sim, executive director of Soilbuild, said completion of Eightrium is a milestone for the group and a big boost to its business space portfolio. ‘In addition, the shorter cycle for the development of our business space projects complements our core residential property business which has a longer development cycle,’ he said.

The 7,957 sq m site for Eightrium was awarded to Soilbuild by JTC Corporation after a competitive request-for-proposal exercise in November 2005. The site has a 30-year lease, which started in February 2006, with an option to renew for a further 30 years.

Source : Business Times – 10 May 2007

Soilbuild’s Eightrium draws MNC interest

PROPERTY group Soilbuild said yesterday its eight-storey Eightrium @ Changi Business Park is ready for occupation, having been granted a temporary occupation permit (TOP) three months ahead of schedule.

BT understands that some space has already been leased, after marketing began as early as March. Soilbuild said in its statement that the high-tech building, which has a net lettable area of 178,000 sq ft, has attracted strong interest from MNCs in the high-tech, research and development and knowledge-intensive sectors.

Property firms CB Richard Ellis (CBRE) and Jones Lang LaSalle (JLL) have been appointed joint leasing agents.

‘We have received many enquiries about the development, with several parties in various stages of negotiations,’ said CBRE, which started marketing the property in March. Eightrium is achieving an average rental rate of $3-$3.50 per sq ft (psf), it said.

Island-wide, median rents for business park space ranged from $2.79 to $3.70 psf in the first quarter of 2007, CBRE said.

‘Vacancy levels in the office sector have fallen dramatically and occupiers are searching for quality space to accommodate business growth,’ said CBRE’s executive director for office services Moray Armstrong.

‘It is apparent that fast-escalating rents in the tight office sector are encouraging occupiers to find solutions to help contain costs. This has certainly contributed to the surge of leasing activity at Eightrium,’ Mr Armstrong said.

Low Soon Sim, executive director of Soilbuild, said completion of Eightrium is a milestone for the group and a big boost to its business space portfolio. ‘In addition, the shorter cycle for the development of our business space projects complements our core residential property business which has a longer development cycle,’ he said.

The 7,957 sq m site for Eightrium was awarded to Soilbuild by JTC Corporation after a competitive request-for-proposal exercise in November 2005. The site has a 30-year lease, which started in February 2006, with an option to renew for a further 30 years.

Source : Business Times – 10 May 2007

Ascendas builds high-rise factory for food firms

ASCENDAS has started to construct a $118 million factory building for use by food production businesses. A total of 72,000 sq m of space spread out over 284 units will be for sale at the new FoodXchange@Admiralty site.

Speaking at the groundbreaking ceremony for the seven-storey ramp-up facility on Admiralty Road West yesterday, Ascendas president and CEO Chong Siak Ching said that, based on feedback, food industrialists – most of them with small or medium-sized companies – generally preferred to own their own premises.

Ms Chong said that at the end of Q2 2006, occupancy in high-rise food facilities exceeded the 84 per cent level for non-food multi-tenanted facilities.

She said current market rates for comparable sale units are $260 to $310 per square foot.

The FoodXchange@Admiralty site has a balance of 53 years on its lease.

On whether the new facility could see its way into Ascendas’ real estate investment trust, Ascendas Reit, Ms Chong said: ‘The development is still in early stages and discussions of its future plans, such as whether it would be part of a trust, would be premature.’

Spring Singapore chairman Philip Yeo, also present at the ceremony, said that the output of SMEs in the food manufacturing industry increased 11.4 per cent in 2005 over the previous year to hit $2.4 billion. He said that 95 per cent of the 680 enterprises in the food manufacturing industry are SMEs.

He said: ‘Growing local SMEs develop higher value added exportable food products. Direct exports increased by 6 per cent to $714 million in 2005.’

Mr Yeo said that global sales of processed foods are worth more than $4.5 trillion and are expected to grow at 4.4 per cent each year.

FoodXchange@Admiralty will have specialised features including a dedicated kitchen exhaust shaft, cold room operations and design which helps prevent cross-contamination.

In March, Soilbuild Group launched its Senoko Food Connection terrace food factories. The net saleable area is 20,271 sq m and industry watchers estimated that prices would be $140-$150 per square foot.

Source : Business Times – 4 May 2007