By Joyce Teo

SALES of state-owned industrial land have been suspended for the first half of next year in the light of economic uncertainty.
Only industrial land on the 'reserve list' system will be available. These sites go up for tender only when a developer indicates an interest.

The Trade and Industry Ministry said it will also transfer a 5ha site at Tampines Industrial Avenue 4 meant for outright sale this year to the reserve list for the first half of next year. It was the only site confirmed for sale in the latter half of this year.

The reserve list for industrial land for the first half of next year comprises eight sites, six carried forward from this year.

Two new sites, in Kaki Bukit Road and Woodlands Industrial Park, replace two reserve list sites that were sold in October.

The ministry said yesterday the modifications were made in view of the significant changes in the global economy.

Demand in the industrial market, which has been largely insulated from the impact of the global financial crisis for most of this year, is declining while prices and rents are starting to fall, said consultants.

The suspension of outright sales - which follows the Government's earlier move to suspend outright sales of other types of land for the same period - is timely, they said.

The credit crunch, weak sentiment and oversupply means there would be no takers even if there were outright sales of industrial sites, said Mr Dominic Peters, director of industrial services at Savills Singapore.

Colliers International's director for research and advisory, Ms Tay Huey Ying, added: 'It is wise to not force-feed the market with additional supply.'

Industrial prices and rents have started to come off, with some buildings experiencing rent declines of up to 20 per cent, said Knight Frank's head of industrial business space, Mr Lim Kien Kim, adding that 'rents are very negotiable now'.

Rents of high-tech buildings and the industrial space in business parks will be hit the hardest, consultants said.

Rates rose to as much as $5 per sq ft this year, thanks to spillover demand from the office sector as companies looked for cheaper alternatives, but demand for office space has now softened.

Mapletree Investments, which took over JTC's ready-built facilities in July, said its occupancies remain very high, and that it will help the 'few tenants' who may be facing various difficulties paying rent.

JTC earlier told The Straits Times that it is monitoring the market situation closely and will take appropriate action to offer tenants rental assistance if necessary.

But the industrial market is not expected to crash, considering it did not run up very much, said consultants.

'Just as the rents were going up, the market took a turn,' said Mr Peters.

Consultants expect rents of standard factories to dip about 10 per cent to 15 per cent next year, while rents of high-tech and business park space could fall by 20 per cent to 30 per cent.

This article was first published in The Straits Times on December 11, 2008.