The focus of the local authorities has always been on keeping land and rental costs competitive. As such, it is not surprising that the industrial sector is regulated with stringent policies to minimise speculation in real estate investments. Despite some of these barriers, opportunities remain available in two forms: privately-held properties, or assets with existing longer term land tenure and running tenancies.
In particular, while opportunities remain selective in the private industrial market, there is potential for a pick-up in this sector’s investment outlook. Not bounded by JTC policies, these properties enjoy higher flexibility in subletting which has increasingly garnered more attention from investors.
With better infrastructure in place, this may encourage the proliferation of new growth areas, especially manufacturing sectors with higher value-added production. If these growth clusters successfully draw occupiers, investors might find it attractive to look for long-term sale and leaseback opportunities with such occupiers. Investors are inclined towards assets with a long weighted average lease expiry as it provides a recurring income from the running tenancies.