Measure/Policy Highlights
URA revised
guidelines for
supporting uses
in industrial
developments
• The Urban Redevelopment Authority
(“URA”) reviewed the allowable
supporting uses in industrial
developments, which are kept within
a 40% quantum, so as to better
meet industrialists’ needs
• The revisions, which are effective
from 24 November 2014, give
industrial developers more flexibility.
For instance, staff canteen in
industrial developments (now
termed as “industrial canteens”)
are now allowed to serve external
customers and commercial uses
e.g., clinic, banking hall/ATM,
minimart and fitness centre/gym are
now allowed in selected outlying
industrial estates
URA revised
guidelines for
e-business and
media uses
in industrial
developments
• URA revised the guidelines for
e-business and media uses in
industrial developments, which
were introduced in 2000 and 2001
respectively, which will take effect
from 24 November 2014
• Businesses that provide
telecommunications infrastructure
and/ or develop software as well
as core media activities
3
, will be
allowed in industrial developments,
as part of the 60% predominant
component for core industrial uses.
All call centres will also be allowed
to be located in Business Park and
Business 1 developments, as part of
the 60% predominant component
• However, businesses that use
software to conduct business
electronically e.g., for marketing
and consultancy and non-core
media activities
4
will be regarded as
commercial uses, as part of the 40%
ancillary component for supporting
uses
Measure/Policy Highlights
Proposed
changes to
regulatory
framework for
REITs
• The MAS published a consultation
paper in October 2014 for
public feedback on proposed
enhancements to the regulatory
framework for REITs and REIT
Managers
• The proposed changes were focused
on enhancing the transparency and
corporate governance of the REITs
and creating stronger disclosure
standards
Source: JTC, MTI, MAS, DTZ Consulting & Research, March 2015
Impact of the JTC’s Revised Subletting Policy
The revision of JTC’s subletting policy is not expected to have a
major impact on most industrial REITs, especially those whose
portfolios are already compliant with the revised anchor tenant
requirements. In addition, the three-year grace period for end-
user lessees and third-party facility providers to comply is likely
to help mitigate the impact of the policy revision. However,
competition among third party facility providers is expected
to intensify given the more stringent subletting requirements,
especially for anchor subtenants.
Industrial Prices and Investment Market
Following the implementation of policies andmeasures to ensure
a stable and sustainable industrial property market in recent
years, industrial price growth has been moderate. According to
JTC, industrial property prices rose by 3.2% in 2013 and 3.5%
in 2014, a more sustainable level compared with the 24% to
27% annual price growth from 2009 to 2012. Overall industrial
sales transaction activity also fell sharply by 48% from 2,631
transactions (with a transaction value of about $6.0 billion
5
) in
2013 to 1,356 transactions ($3.1 billion) in 2014.
Despite concerns over an increase in interest rates and tightening
regulations in the industrial property sector and the REIT industry,
REITs continued to lead the industrial property investment market.
While the investment market continued to stay fairly healthy in
2014, most of the transactions were for investment lots below $50
million. There were also fewer sales-and-leaseback transactions,
as a result of the revision in JTC’s subletting policy. In view of an
anticipated decline in rentals in some industrial property segments,
expectations of a rise in overall interest rates in H2 2015 and the
Total Debt Servicing Ratio (“TDSR”) framework continuing to
impact retail investors, industrial property prices and investment
activity are expected to continue to moderate in 2015.
3 Core media activities are production services which require technical facilities e.g., studios and high-tech production equipment.
4 Non-core media activities include the marketing, distribution and aggregation of digital content.
5 All currencies in this report are in SGD, unless stated otherwise.
64 65
