I N D E P E N D E N T M A R K E T S T U D Y ( S I N G A P O R E )
By DTZ Debenham Tie Leung (SEA) Pte Ltd
3.0 BUSINESS AND SCIENCE PARKS
6
Existing Supply
7
Five business park properties were completed in 2014, with
majority in one-north e.g., Nucleos (32,100 sqm), Galaxis
(47,800 sqm) and The Shugart (33,500 sqm). This led to private
8
business park stock rising by 8.9% (114,000 sqm) in 2014, the
highest since 2011 (Figure 3.1). About 58% (80,000 sqm) of the
new supply were multi-tenanted business park developments
catering to biomedical, media, Infocommunication (“ICT”),
science and engineering research companies, while the
remaining were Build-to-Suit (“BTS”) facilities.
Figure 3.1: Net Supply, Net Demand and Occupancy
(Private Business Park)
Source: JTC, DTZ Consulting & Research, March 2015
As at Q4 2014, there was 1.4 million sqm of private business
park space, constituting only about 4% of private industrial
stock in Singapore (37.6 million sqm). Majority is located in
the Central Region (686,000 sqm, 49%
9
), while the remaining
is distributed evenly across the East Region (362,000 sqm,
26%) and West Region (341,000 sqm, 25%).
Potential Supply
Significant business park space (288,300 sqm) is expected to
complete in 2015 (130,600 sqm) and 2016 (157,700 sqm).
Majority (258,700 sqm, 90%) of the new supply is in the
Central Region. The larger business park developments in the
pipeline include Mediacorp Broadcast Centre (63,900 sqm) and
Mapletree Business City Phase 2 (102,400 sqm), completing in
2015 and 2016 respectively. Nonetheless, about 39% (111,100
sqm) of this are single-user BTS facilities and this is expected to
help relieve some of the supply pressure in the business park
segment over the next two years.
Demand and Occupancy
The business park market remained healthy, despite the
slowdown in the overall industrial market. Notably, the
demand situation for business parks improved in 2014,
after experiencing relatively soft leasing activity in 2013. In
particular, there was a marked increase in islandwide business
park demand (80,000 sqm) in 2014, higher compared with the
53,000 sqm in 2013 and annual average net demand over the
past decade (60,000 sqm). The relatively healthy commitments
of newly completed multi-tenanted developments, such as
Galaxis, partly contributed to the pick-up in demand. There
was also support from an increased number of prospective
occupiers seeking more affordable options in business park
spaces, amid the considerable increase in office rents.
Despite the improved demand, islandwide occupancy for
business parks fell by 1.0%-points from 82.1% in Q4 2013
to 81.1% in Q4 2014. The decline was primarily due to the
significant new supply, especially in one-north. On the other
hand, some properties at Changi Business Park such as
Hansapoint, Honeywell Building and 1 Changi Business Park
Avenue 1 experienced a rise in occupancy
10
in the recent
quarter. As a result, occupancy in the Central Region fell by
6.8%-points in 2014, while the East and West Regions saw
increases of 8.0%-points and 1.0% points respectively.
Rents
According to JTC’s business park rental index
11
, private
business park rentals continued to increase by 0.4% in 2014,
on the back of rising office rents. Nonetheless, the increase
was more moderate compared with that in 2013 (5.8%),
amid the fall in occupancy. Median monthly rents
12
for private
business parks stood at $4.09 per sq ft ($44 per sqm) as at
Q4 2014.
6 According to JTC, science parks where the primary activity is R&D are included in the Business Park category from Q3 2002.
7 All supply and demand figures are in terms of Net Lettable Area, unless stated otherwise.
8 This report focuses on private industrial space.
9 Some figures in this report may not add up due to rounding off.
10 December 2014 versus September 2014: Hansapoint (97.6% vs 71.0%), Honeywell Building (97.7% vs 90.0%) and 1 Changi Business Park Avenue 1 (44.3% vs 19.8%).
11 The rental index is computed using fixed weights based on 2009 transaction values before Q1 2013. From Q1 2013, the weights used are fixed using 2012
transaction values. Data is only available from 2012 onwards.
12 Median rentals in this report are from the REALIS database and refer to gross rent including service charge and GST. They have not been subjected to computation
e.g., moving average. Rental information is dependent on the number of rental transactions in the quarter and is obtained from returns filed with the Inland
Revenue Authority of Singapore (“IRAS”). When a property is let out, the property owner has to inform IRAS the details of the tenancy agreement.
-50,000
2004
2008
2006
2010
2012
2005
2009
2007
2011
2013
2015F
2014
2016F
10%
50%
80%
20%
60%
90%
30%
70%
100%
0%
40%
0
50,000
100,000
200,000
250,000
sqm
150,000
130,600
sq m
157,700
sq m
Average Annual Net Supply (2004 to 2013): 72,200 sqm
Average Annual Demand (2004 to 2013): 60,000 sqm
Net Supply (LHS)
Net Demand (LHS)
Occupancy (RHS)
ASCENDAS REAL ESTATE INVESTMENT TRUST ANNUAL REPORT 2014/15
