Benefiting by better use of industrial space

Benefiting by better use of industrial space

SINGAPORE - How does one combat rising industrial property prices?

Various options have been tossed on the table.

Companies, for example, could make better use of their land space.

Tan Boon Leong, director of industrial services at Colliers International, noted how one company (Soon Hock Container & Warehousing) is building a container depot on the rooftop of its new hub in Tuas instead of taking up the entire ground level just to store the containers; this leaves space available for warehousing purposes.

The government's introduction of shorter, 30-year leases has indeed helped to ease some cost pressures, some analysts said.

Lim Kien Kim, head (industrial) at Knight Frank said this is because the absolute sum for buyers is lower.

But he sees little impact on rents as tenants will pay what they are prepared to regardless of the length of the property's lease.

Chua Chor Hoon, DTZ's head of Asia-Pacific research, noted that if these new measures are built to appeal to investors rather than meet the needs of end-users, they could result in developers strata-subdividing the sites for sale.

"Then there will be a supply-and-demand imbalance, which will drive rents up for space that meet industrialists' needs, while those that do not meet their needs end up with unauthorised uses, or worse still, are vacant."

"If the short-tenure sites were to be developed with many small units, albeit meeting the minimum 150 square metres, and if these strata unit prices are close to prices of 60-year leasehold units, then more measures will be warranted."

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