Tendering for the Karanway site will begin in June (Image: Google)
Singapore is set to auction off an additional 29% more industrial land in the first half of 2024 in the biggest hut land hunt in a decade, but experts say bidding will be weak as the market slows. I predict that it will.
Singapore’s Ministry of Trade and Industry (MTI) said on Wednesday it would offer five sites totaling 8.3 hectares (34 acres) to developers as it announced its industrial land sale program from January to June. This is nearly a third more land than the 6.43 hectares made available to the ministry through five auctioned sites in the second half of 2023.
With Singapore’s industrial vacancy rate already rising to 11% and rent growth slowing to 2% in the third quarter, the Real Estate Board expects bids for sites will continue to be weak amid the economic downturn, according to Colliers. Expect.
“This is to ensure there is an adequate supply of land available for businessmen, especially those looking to build their own facilities,” Colliers director Catherine He, who heads the company’s research team in Singapore, said on Friday. He talked about the MTI plan. . “However, with increased industrial supply available on the market and a weaker economy, bidding for these sites may be slower than in the past.”
Biggest pipeline in the last 10 years
Singapore’s H1 2024 land sales program, part of a series of bi-annual announcements, is the first six-month plan announced by MTI since H2 2014, when the government made available a total of 9.5 hectares of industrial land. This is the largest. , based on data from Huttons Asia.
Mr Gan Kim Yong, Minister of Trade and Industry, Singapore
Colliers’ Mr He noted that the average site size of the upcoming land sale program increased by 29 per cent to 1.66 hectares compared to 1.29 hectares in the previous six months.
Alan Chong, executive director of Savills’ research and consulting team, believes companies will make offers based on their needs, but participation in future bids will be affected by weakness in Savills’ domestic manufacturing sector. I expect that it will be received.
“Bidders will make decisions based on their expertise in what their respective industries will look like in the future,” Cheong said. “Adding more locations to the confirmed list provides a lifeline for the market to absorb this downturn should manufacturing activity pick up unexpectedly.”
The largest of the five sites in the upcoming program is a 4.45-hectare plot at Curranway in the McPherson district, which is due to become available in June with a 32-year use period.
In the western region of the island, two adjacent plots along Penjul Lane and Penjul Road are scheduled to be auctioned in April and May respectively, while the 0.9-hectare plot 8 Jalan Papan near Jurong district will be auctioned next month. It will be put on the market. The 0.5-hectare site at 5 Tampines North Drive on the easternmost tip of the island is expected to be opened to potential buyers in February.
In addition to the main programme, the Ministry of Trade, in the same announcement, revealed a preliminary list of five additional sites covering 5.46 hectares, which could be put to bid if potential buyers express sufficient demand for additional sites. be.
supply exceeds demand
In a statement on Wednesday, MTI stressed that it will continue to offer more land in the future to ensure an adequate supply of industrial space in the Lion City.
In addition to increasing supply in the coming months, the Singapore government is also planning to add industrial land in the longer term, with media reports earlier this week revealing plans to repurpose up to 172 hectares of industrial land near the new port. became. in the Tuas region by 2029.
According to a Colliers report, industrial land rents across Singapore have risen for the third consecutive year, with quarterly lease growth increasing by 2% in the third quarter from 2.1% in the previous three months. Slowed down.
Approximately 1 million square meters (10.7 million square feet) of new industrial land will enter the market between 2024 and 2026, 43% more than the average leased area of 700,000 square meters over the previous three years, authorities said. is expected to be vacant. The 2023 average is likely to be 11.5%, and from 2018 he will rise further from the 2022 market average of 10.6%.