Ravi Chandran
Investment opportunity with a freehold light industrial property located in a well-established industrial estate
- The freehold light industrial property for sale is ideal for end-users and main contractors, investors looking for steady income-generating assets
Colliers International, on August 5th announced that it will put up a freehold light industrial property located at 14 Genting Road for sale via an expression of interest exercise (EOI) for S$16.8 million on 6 August 2020.
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The indicative price for the freehold light industrial property of S$16.8 million translates to S$992 per square foot (psf) based on the existing Gross Floor Area (GFA) of 16,943 sq ft (1,574 sq m).
Also known as the Blue Building, the property is a freehold 5-storey light industrial building located in a well-established industrial estate within the Geylang Planning Area. The five-storey light industrial building comprises production areas on the 1st, 2nd and 3rd storeys, while the 4th and 5th storeys are currently utilised as a secondary workers’ dormitory. The entire building enjoys full occupancy with leases expiring in June 2021. The freehold light industrial property is to be sold with existing tenancies.
Well-connected by major roads and expressways, the subject property is also easily accessible via Mattar, Potong Pasir and Geylang Bahru MRT stations.
Steven Tan, Senior Director of Capital Markets and Investment Services at Colliers International, said, “The property is an income-generating asset and is currently fully tenanted. This is excellent for investors looking for steady income-generating assets with potential upside for income growth. Demand for worker dormitories has increased amid the current pandemic. In addition, freehold industrial site is in good demand as the property is not subject to JTC policies. This presents a great opportunity for investors to acquire for long-term investment with the potential of rental and capital appreciation.”
Tan added, “End-users or main contractors may also find this property attractive because of its approval for use as a secondary workers’ dormitory. In light of the current coronavirus pandemic (COVID-19) situation, companies with migrant workers will find this property attractive as it can house their workers in the same facility. By doing so, this could possibly reduce the risk of a potential community outbreak as compared to housing them under a designated dormitory. Furthermore, this is also likely to reduce the costs of paying dormitory operators”.
The freehold light industrial property is currently owned by a real estate investment firm based in Singapore known as Meir Investment Pte Ltd. Sebestian Soh, Director of Meir Investment Pte Ltd, said, “There has been an increase in enquiries from small-medium enterprise (SME) contractors, looking to house their workers in standalone facilities. By buying a dormitory, the monthly instalment contributes to the ownership of a rare asset class vis-a-vis paying rents. The cash outflow would work out to be similar given the low interest environment.”.
The EOI for this freehold light industrial property will close on Thursday, 3 September 2020 at 3pm.
The JTC Q2 2020 Industrial property statistics showed this sector is most resilient across the property sectors (retail, office, hotel, residential), amid the global coronavirus (COVID-19) pandemic. The resilience is witnessed by continued warehouse demand supported by the accelerated adoption of e-commerce and government’s stockpiling of essential goods.
Ms Tricia Song, Head of Research for Singapore at Colliers International, commenting on the JTC Q2 2020 Industrial property statistics said, “(despite the resilience) overall industrial rental and price declines were more pronounced in Q2 2020 than in Q1 2020, capturing the ground sentiments and impact of COVID-19 Circuit Breaker measures which started on 7 April 2020. With the rapidly evolving COVID-19 situation, the industrial sector is likely to experience continued pressures on rents and prices, as with other sectors.”
She added that the JTC Q2 2020 Industrial property statistics showed “Singapore all-Industrial property market rents declined 0.7% quarter-on-quarter (QOQ) in Q2, dragged by single-user factory.”
JTC Q2 2020 Industrial property statistics showed business parks held up best but still declined 0.2% QOQ. Despite the weakness in rents, overall occupancy rate, however, rose marginally to 89.4% from 89.2%. Meanwhile, prices of industrial properties saw a decline of 1.1% QOQ, attributing largely to the 1.5% QOQ decline seen in multi-user factories.
Overall, Colliers International is cautious about Singapore industrial market’s outlook for this year, and forecast the general industrial market to remain weak in 2020.
Analysing the JTC Q2 2020 Industrial property statistics, Colliers suggested that the business park and high-specs segments could be more resilient, benefiting from Technology sector. It added that the JTC Q2 2020 Industrial property data could lend support to the view that warehouses may see support from the rise in e-commerce driving demand for logistics services, and are also well-positioned for any economic rebound.
“JTC Q2 2020 Industrial property data suggested that the rapidly evolving COVID-19 situation is expected to weigh on the industrial property market,” said Ms Song.
“As the impact across manufacturing sectors is uneven, we expect overall demand for general factory space to remain weak in the near term. Industrialists probably paused their expansion plans and are recalibrating space requirements. While a delay in supply completions provides some relief to what would have been potentially a supply glut, factory rents are likely to decline more than other segments in 2020, especially for older spaces in remote locations.
While warehouses have benefited from increased e-commerce and stockpiling during COVID-19, we note that there is still ample available stock. As vacancy continues to improve below its current 11.7% level, we expect warehouse rents to stabillise in 2020 and to recover from 2021 onwards.”
