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.”
It further tabulated URA’s announcement of the second half 2018 Government Land Sales (GLS) programme with the first half GLS programme for easy comparison, and to make the following points:
| 1H2018 | 2H2018 | |
| Confirmed list | ​ | ​ |
| Private residential | 2,325 | 2,010 |
| Executive Condominium | 450 | 695 |
| Commercial | 4,450 sqm | 42,200 sqm |
| Hotel | 0 | 390 rooms |
| Reserve List | ​ | ​ |
| Private residential | 4,015 | 4,820 |
| Executive Condominium | 1,255 | 515 |
| Commercial | 59,510 sqm | 82,000 sqm |
| Hotel | 0 | 540 rooms |
Source: URA/JLL research
“Residential
In the 2H2018 confirmed list, there are only 3 private residential sites and a white site supplying 2,010 units, a 14% decline from the 2,325 units supplied by 5 private residential sites under the 1H2018 confirmed list. The moderation is probably due to concerns of oversupplying the market since the buoyant collective/en bloc sales market is generating the bulk of future supply. Between 2H2016 and 1H2018, GLS sites will generate about 30% of the units to be developed while some 70% will be from collective/enbloc sites.
The confirmed list private residential sites are at Kampong Java Road and Middle Road which are in the Core Central Region (CCR) and Sims Drive which is in Rest of the Central Region (RCR). There are no private residential sites in Outside Central Region (OCR) in the 2H2018 confirmed list although the white site at Pasir Ris will generate private residential units.
The focus of the 2H2018 residential GLS seems to be on the central region which accounts for 79% of collective sale sites sold in 1H2018 to-date. Although the three GLS sites could help to meet demand from developers, it is uncertain as to whether they will mitigate optimistic land prices. They are also unlikely to dilute demand for collective sale sites, especially those in the prime districts for which there is keen interest.
Commercial
A white site at Pasir Ris Central has been included in the 2H2018 confirmed list, capable of generating 35,900 sqm of commercial space and 535 private residential units. Located next to the Pasir Ris MRT station and bus interchange, the development is slated to be a future major retail mall in the area.
Sites for office development remained absent in the confirmed list in spite of the continued strengthening of CBD office rents. The government is likely to be hoping for demand to spill into the decentralised market in an effort to bring job opportunities closer to homes. This is reflected in the placement of a white site capable of yielding minimally 50,000 sqm gross floor area of office space in Woodlands Square/Woodlands Avenue 2 in the Reserved List.
Hotel
A site for hotel development (390 rooms) is in the 2H2018 confirmed list. The last time a site with a hotel component was included in the confirmed list of the GLS programme was 7 years ago in 2H2011. The current hotel site comes on at a time when the economy has improved, healthy tourist arrivals have been recorded and the Trump-Kim summit has been successfully hosted.”
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