Demand for industrial sites has been satisfied suggests IGLS programme

The uplift in economic and manufacturing sector performances and signs of an imminent bottoming of the industrial property market have not prompted the Government to up the IGLS industrial sites supply for the second half of 2018, said JLL. It noted that the IGLS supply for second half of 2018 has been kept relatively similar to that for first half of 2018.

Specifically, the 2nd half of 2018 IGLS Programme will offer 13 industrial sites covering 12.59 ha, comparable to the 13 sites covering 12.56 ha on the 1st half of 2018 IGLS Programme.

JLL said the Government’s measured approach for the 2nd half of 2018 IGLS Programme could have stemmed partly from the waning interest observed for recent IGLS industrial sites as this could suggest that demand for IGLS industrial sites has been more or less satisfied.

There is therefore little justification for increasing the overall industrial sites supply at this juncture, JLL noted.

Three out of six parcels on the 1st half of 2018 Confirmed List have failed to attract any bids, JLL highlighted to illustrate its point. It noted that for industrial sites that garnered bids, those with tender closings from November 2017 have received only one to two bids, down from the typical three to five bids seen for IGLS industrial sites during the most part of 2016 and 2017.

The Government could have also taken into consideration downside risks such as a potential escalation of a global trade war which is expected to have some dampening effect on the Singapore economy and the manufacturing sector performance.

“The successful triggering of one 30-year leasehold site on the 2nd half of 2017 Reserve List and two similar plots on the 1st half of 2018 Reserve List for open tender also did not compel the Government to place any 30-year leasehold plots on the Confirmed List,” the report said.

It added: “Instead, to cater to varying needs and potential strengthening in demand, the Government has placed a slightly larger quantum of industrial space in terms of potential gross floor area in the Reserved List for industrialists/developers to trigger for tender in response to market demand. The seven plots on the Reserved List could yield a total gross floor area of 2.12 million sq ft, up 7.7% from the 1.97 million sq ft that the seven plots on the 1H 2018 Reserved List could generate.”

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