Industrial development at 53 Loyang Drive for sale at guide price of $25m

image: Savills Singapore

The industrial development at 52 Loyang Drive is for sale via private treaty

Industrial development
image: Savills Singapore

An industrial development formerly owned by Catalist-listed building solutions provider Libra Group is up for sale via private treaty. Savills Singapore, the sole marketing agent for the property at 53 Loyang Drive said that the development is available for sale via private treaty.

The Libra Group announced in November 2019 that that United Overseas Bank (UOB) has appointed receivers for the company’s mortgaged industrial development in Loyang Drive.

53 Loyang Drive is located along Loyang Drive, off Pasir Ris Drive 3 and Loyang Avenue. It is in the Eastern region of Singapore. The immediate neighbourhood comprises mainly of industrial properties and HDB residential blocks.

The property is an industrial development consisting of two 4-storey industrial blocks adjoined by a single-storey building. It has a total site area of approximately 65,060 square feet with a gross floor area (GFA) of approximately 116,427 square feet. Under the Urban Redevelopment Authority’s Master Plan 2019, the land is zoned Business 2, with a plot ratio of maximum 2.5. The property has a JTC leasehold tenure of 60 years, effective from 1992, with a remaining lease of circa 31 years.

The Loyang Drive development enjoys close proximity to amenities and facilities like the Loyang Point where there is an array of amenities such as grocery and retail shopping, schools as well as food centres like Changi Village.

Public transportation is available along the main road and it is in close proximity to the Tampines Expressway. Current MRT stations are Pasir Ris and Tampines East located a short drive away. With the Cross Island Line Station targeting to open by Year 2029, the future Loyang station will create much conveniences for occupiers at the Loyang Industrial Estate in the long term.

Sharon Teo, Managing Director, Business Space, Savills Singapore, who is handling the sale, commented: “With a remaining land lease of 31 years, the property would present as an attractive proposition for prospects looking for longer leasehold property. Based on permissible plot ratio of 2.5, the current plot ratio of 1.8 remains under-utilised that will offer prospects with potential asset enhancement or redevelopment opportunities.”

The industrial development which was bought by the Libra Group for S$16 million in 2014 is for sale via private treaty for $25 million.

Mr Paul Ho, chief officer at iCompareLoan, noted that the sale of 53 Loyang Drive comes at a time when investors of industrial development are taking a more defensive strategy. “But still the industrial market is among the most resilient of sectors,” he added.

The JTC All Industrial Rental Index grew for the second consecutive quarter by 0.6% q-o-q in Q1 2021. This is in line with Singapore’s expected economic recovery. Rental growth was observed across both the factory and warehouse submarkets. The JTC Single-User and Multiple-User Factory Rental Index increased by 0.2% and 0.8% q-o-q respectively, while the JTC Warehouse Rental Index rose by 0.5% q-o-q.

CBRE Research commenting on the latest JTC All Industrial Rental Index noted resilience in factory and warehouse rents in the same quarter, with stable leasing activity observed particularly for high-specs factory and prime logistics projects.

Overall industrial occupancy rose by 0.1 percentage points q-o-q to 90.0% in Q1 2021. The growth was attributed to the multiple-user factory submarket, which saw a 0.5 percentage point increase to 89.0% contributed by improving demand and project delays.

On the flipside, both single-user factory and warehouse occupancy fell marginally this quarter by 0.1 percentage points. This was contributed by project completions in the quarter, including six single-user factory completions in Q1 2021, although all were relatively small-scaled (each below 0.20 mil sq. ft.). In addition, a net supply of 0.75 mil sq. ft. was noted for the warehouse submarket on the back of three completions in the quarter, the most significant being the partial TOP of Cogent Jurong Island Logistics Hub (0.34 mil sq. ft.).

Moving forward, upcoming factory supply for Q2 – Q4 2021 is estimated at 8.58 mil sq. ft., its highest since 2017 due to completion delays vis-à-vis the COVID-19 pandemic. While the saturated factory pipeline may place some pressure on rents with several large-scale multiple-user factory projects expected to be completed this year, the positive outlook for Singapore’s manufacturing sector could lend support to rents. In addition, while the factory submarket remains two-tier, high-specs factory buildings will continue to see sustained demand, supported by the electronics, precision engineering and biomedical manufacturing segments.

On the other hand, the overall warehouse pipeline appears to be manageable, with 3.53 mil sq. ft. of stock estimated to come onstream from Q2 – Q4 2021. The upcoming supply is expected to be absorbed gradually by the market, against a backdrop of tight prime logistics vacancy and healthy demand for the warehouse market from third-party logistics, food logistics and e-commerce players. With these observations in mind, CBRE Research expects warehouse rents to remain resilient in the coming quarters.

Overall, the outlook for the industrial sector appears sanguine in line with the expected economic recovery, with both factory and warehouse rents poised to remain resilient and even exhibit some growth, noted CBRE Research. Prime logistics rents will continue to perform on the back of strong demand, with full-year rental growth expected for the segment.

Written by Ravi Chandran

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