Industrial property market to be more transparent with JTC data

SINGAPORE — Businesses looking to buy or rent industrial properties in Singapore will be able to make more-informed decisions on where to look and how much they should be paying, following JTC’s move to make available more-detailed information on current trends in a bid to introduce more transparency into the market.

The move comes as concerns have been raised about the cost of commercial property in Singapore, with suggestions that some landlords are looking to increase prices by unrealistic levels.

JTC, which took over the collection and dissemination of industrial property data from the Urban Redevelopment Authority, yesterday launched a service on its website to allow the public to search for past rental and sale caveats for industrial sites — down to the street level.

The information will be updated on a quarterly basis and dates back to the past three years.

Mr Leong Hong Yew, director of Market Planning Division at JTC, said: “We want to make the market more transparent. Rather than just looking at the top-line number at the index level, we want to give more granularities in terms of geographic area, so (businesses) can see where are the areas they want to move to or whether there are cheaper alternatives. They can look at these and make informed decisions.”

There have been reports in recent months of tenants experiencing significant hikes in rents when renewing their leases. Many have called on the Government to take steps to ease these concerns.

Mr Victor Tay, chief operating officer of Singapore Business Federation, commended JTC’s effort, as businesses can now peg their bids to a price range based on the available historical information.

“In cases where sellers or landlords attempt to hike up prices too much, buyers and tenants can actually decline. An authoritative publication of industrial rent and purchase transactions is a commencement step towards a fair tenancy and fair transaction situation. Transparency can help businesses bargain to stay on or anchor themselves to longer term leases,” he said.

“When there’s a lack of transparency, companies tend to peg prices at the higher end, or even the highest pricing plus a certain premium, and because land is scarce, companies tend to outbid themselves.”

Property analyst Colin Tan of Suntec Real Estate Consultants agreed, adding that the relatively opaque situation in the past often put tenants and buyers at a disadvantage at the negotiating table.

“In the private sector especially, tenants are often at a loss when it comes to the starting level of negotiation. It’s usually up to the landlords to do it because they may have more experience. So, having such data is a step in the right direction because it helps to even out the playing field,” said Mr Tan.

“Whether or not this will lead to more affordable prices going forward is also dependent on the demand and supply situation. In the industrial space, there are so many types of properties and different types of tenure. Negotiation is just one aspect of the whole picture,” he said.

The Government has been ramping up supply of industrial space over the past few years, slowing down a rise in sale prices and rentals of these properties.

An average of about 2.1 million sqm of space is expected to be made available every year over the next three years — an amount that is significantly higher than the average annual supply and demand in the past three years.

“In the next few years, we’re seeing a whole range of industrial space coming up, including multiple-user factories, single-user factories, land-based, high-rise or ramped-up factories, so the market is well taken care of,” said JTC’s Mr Leong. “Looking at the supply coming up, we would expect prices and rentals to continue to moderate, and this should be good news for our industrialists operating out there.”