Two industrial properties at car showroom belt up for sale

Two industrial properties along popular Leng Kee car showroom belt up for sale for S$15 million and S$23 million

Two industrial properties nestled along the popular Leng Kee car showroom belt have been put up for sale by Expression of Interest (EOI).

Located at 3 Leng Kee Road and 19 Leng Kee Road, the two industrial properties sit alongside showrooms for Lamborghini, Ferrari, Maserati, BMW, Mercedes, Porsche, Volkswagen, Audi and Toyota, amongst other well-known brands.

The two industrial properties are jointly and exclusively marketed by Knight Frank Singapore and Yeo & Yeo Properties. Redhill MRT station and matured housing estates in the vicinity are within a brisk 5-minute walk to the properties. No ground rent is payable for either property.

3 Leng Kee Road

The property at 3 Leng Kee Road is a 2-storey workshop/showroom cum office building with a land area of 1,506.6 sq m (approximately 16,216.89 sq ft) and floor area of 1,372.94 sq m (14,778.19 sq ft). It is currently under light industrial use, with a car showroom and workshop on the ground level and a balance leasehold of 33 years. The standalone, detached building is currently tenanted by Stuttgart Auto Pte Ltd.

The guide price for the property at 3 Leng Kee Road is S$15 million.

19 Leng Kee Road

At 19 Leng Kee Road, the property is a 5-storey showroom cum factory building with a half-basement carpark. The property has a land area of 1,358 sq m (approximately 14,617.38 sq ft) and floor area of 2,696.76 sq m (approximately 29,027.65 sq ft). The building has a balance leasehold of 35 years.

According to the Master Plan 2014, the site is zoned “Industrial (B1)”, with an allowable Gross Plot Ratio of 2.5. Future owners can repurpose the space for various uses, such as for furniture/electronics display on the ground level, self-storage, car accessory businesses or even for eCommerce.

The guide price for the property at 19 Leng Kee Road is S$23 million.

Tan Boon Leong, Head of Industrial, Knight Frank Singapore, shares, “For qualifying industrial users, especially those in the automobile industry, this is an opportune time to own a corporate building. Due to its size, this might also attract more prestigious, branded dealers and distributors.

“The superb location right next to Redhill MRT station, plus a ready pool of labour from the nearby catchment of residential developments, will definitely enhance the value of the properties in the median term.”

The EOI for the two industrial properties along Leng Kee Road will close on 3 December 2019, at 3.00pm.

With broad based demand, Singapore overall industrial property market rents have been bottoming out, said a recent research by Colliers International. It added that with deteriorating manufacturing and trade statistics, industrial property market rents and occupancy could come under fresh pressure.

The report pointed out that industrialists have already become more cautious on their space requirements, renewals and expansion plans.

• “Business park rents increased 0.5% HOH and 2.1% YOY while factory and warehouse rents saw marginal declines.
• Ageing factories will likely be under the most pressure as more than 78% of the supply pipeline is factory space.
• We recommend landlords of ageing properties consider asset enhancements, such as increasing the floor loading capacity, to be ready for Industry 4.0.’

Widening rental gap between the “new economy” and “old economy”

“Based on advanced estimates from the Ministry of Trade and Industry (MTI), Singapore’s GDP grew by only 0.1% YOY in Q2 2019, the lowest in a decade. As of 22 July 2019, Oxford Economics has further downgraded Singapore’s GDP growth forecast for the year from 1.9% to 0.7%, on weaker Chinese import demand and persistent trade war uncertainties.

According to Colliers, business park monthly rents increased 0.5% HOH and 2.1% YOY to SGD4.33 (USD3.20) per sq foot in H1 2019 amid very tight supply. We notice that tech firms continued to gravitate towards newer business parks and high-tech spaces for good amenities and cost savings.”

The research pointed out that monthly industrial property market rents for high-spec industrial buildings located outside of science parks and business parks increased 1.0% HOH and YOY to SGD2.93 (USD2.16) per sq foot. Meanwhile, average gross monthly rents of warehouse-logistics properties slipped 0.8% HOH and YOY to SGD1.24 (USD0.92) per sq foot.

“Going forward, new business park properties and high-spec spaces should continue to enjoy favorable rental growth due to their premium quality and limited stock, while older factory space may see flat to declining rents. As such, we expect the rental gap of business park / high-specs spaces and the general factory/warehouse space to widen towards the end of 2019.”

The report said that factory space dominates upcoming supply

In taking reference from JTC data, the Colliers Research said that total industrial stock completions in H1 2019 stood at 5.5 million sq feet (511,000 sq metres, net), of which more than 56% are single-user factory spaces.

“These total completions were close to the full year 2018 completions of 5.8 million sq feet (543,000 sq metres). Demand followed supply closely in H1 2019, resulting in a stable all-industrial vacancy rate of 10.7%, unchanged from the end of 2018.

In H2 2019, JTC expects another 10.2 million sq feet (946,000 sq metres, gross) of industrial space, 77% of which are single-user factories. Assuming 90% efficiency, total completed industrial space in 2019 would be around 15 million sq feet (1.4 million sq metres, net), an increase of more than 2.5 times from 2018. New supply across all industrial types is set to further intensify in 2020 to 18.8 million sq feet (1.7 million sq metres, gross), led by multiple-user factories at 47%, before tapering off from 2021 onwards.”