INDEPENDENT MARKET STUDY
S I N G A P O R E
By DTZ Debenham Tie Leung (SEA) Pte Ltd
Economic Outlook
The MTI expects Singapore’s economy to grow by 1.0% to
3.0% in 2016. As both the US and Mainland China focus on
their domestic markets, export-oriented economies, such as
Singapore, is expected to be affected. Subdued global economic
conditions and prolonged weakness in commodity prices are
expected to continue to weigh on the manufacturing sector.
Notwithstanding the slower economic growth, regional and
global trading initiatives are expected to underpin medium-
to-long term healthy performance of manufacturing and
logistics sector. Established on 31 December 2015, the ASEAN
Economic Community (AEC) is a single economic region with
free movement of goods, services, investment, skilled labour
and freer flow of capital will be gradually materialised over
time. Meanwhile, the Trans-Pacific Partnership (TPP), which
was formalised in February 2016, is expected to enable
industrialists in Singapore to tap on both resources supplies
and new market competitively, especially when many tariffs in
member countries will be reduced or eliminated.
1.0 Industrial Property Market Highlights
Government Measures and Policies
Policies and measures were introduced since 2013 to ensure
a sustainable industrial property market. These included
the imposition of a Sellers’ Stamp Duty (SSD) on industrial
properties, Total Debt Servicing Ratio (TDSR) framework and
Assignment Prohibition Period.
To align with Jurong Town Corporation’s (JTC) subletting
restrictions implemented in October 2014, the Housing
Development Board (HDB) announced on 30 March 2015 that
new and existing tenants of HDB industrial properties would
not be allowed to sublet their industrial properties from 1 June
2015. Tenants with existing approved subletting agreements
are allowed to renew their subletting agreements up to 31
December 2017. The HDB also implemented subletting cap
on Gross Floor Area (GFA). With effect from 1 January 2016,
industrial land lessees may sublet up to 30% of the GFA, while
REITs are allowed to sublet 100% of the GFA, whereby 70% of
the GFA must be sublet to anchor tenants.
The government has scaled back the Industrial Government
Land Sales (IGLS) programme to pace demand since 2014.
Notably, the total site area of the land parcels released in the
H1 2016 Confirmed and Reserve Lists were 12.24 ha, lower
compared with that in H2 2015 (14.30 ha). Majority of the sites
in the Confirmed List are small (less than 1.0 ha) and suitable
for industrialist to build their own facilities.
Industrial Prices and Investment Market
According to JTC, industrial property prices declined
slightly by 1.7% in 2015, after a moderate growth of 3.5%
in 2014. Overall industrial sales transaction value fell sharply
by 35% from $3.1 billion in 2014 to $2.0 billion in 2015.
Majority of the transactions were for investments below $50
million. Table 1.1 highlights the major industrial investment
transactions in 2015.
Table 1.1: Major Industrial Investment Transactions in 2015
Development Address
Tenure NLA
(sq m)
Vendor
Buyer
Transacted
Price
($ million)
Units Price
1
($ per sq
ft/$ per sq m)
One@Changi
City
1 Changi
Business
Park Central
53 years
remaining
71,158
Ascendas
Development
and Fraser
Centrepoint
Ascendas
REIT
420
5,902/
548
Starhub Green Ubi Avenue
1
42 years
remaining
37,661
Blackstone AEP
Investment
Management
260
6,904/
641
The Kendall
50 Science
Park Road
64 years
remaining
16,824
Ascendas
Group
Ascendas
REIT
112
6,657/
618
Source: DTZ Consulting & Research, March 2016
While there were no major policies implemented in 2015, those introduced since 2012 are still in place. The TDSR framework
(June 2013) continued to impact on strata-titled industrial transactions. Caveats lodged for industrial transactions fell by 28%,
from 1,364 in 2014 to 977 in 2015.
1 Based on transacted price and NLA. Figures do not add up due to rounding off.
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A-REIT ANNUAL REPORT
2015/2016
