Lethargic bidding dented industrial investment sales by 30% in Q1

But REITs are gaining traction for selling their non-core assets in order to regain capital.

Bears continued to claw at Singapore's industrial property market as investment sales fell 56% from last quarter and 30% from last year to $276.1m due to lukewarm bids received by Industrial Government Land Sales (IGLS) sites, Colliers International revealed.

According to a report, JTC awarded the industrial site at Tuas South Link 3 (Plot 16) in January to Soilbuild Construction Group Ltd. at a tendered price of $2.6m.

However, three other land tenders received bids earlier but were eventually not awarded as the bidding prices offered were below reserve prices. "These are the industrial sites at Jalan Lam Huat (Plot B), Tampines North Drive 3 (Plot 2) and Tuas South Link 3 (Plot 27)," Colliers added.

Moreover, for some sites that were available for tender on the Confirmed List for H1 2018, such as Tuas South Link 3 Plot 18 and Plot 21, there were no bids.

Meanwhile, private industrial investment sales remained relatively soft. However, "REITs appear to have gained traction in divesting their non-core assets to recycle their capital," said Colliers International research director and head Tricia Song.

The total private industrial investment sales value dipped 56.2% QoQ and 29.5% YoY to $273.5m (US$209m). "The largest transaction in the quarter was Cache Logistics Trust's sale of 40 Alps Ave to a property fund for $73.8m or $239 psf per GFA. ESR-REIT, AIMS AMP Capital Industrial REIT and Sabana REIT also divested properties during Q1 2018," Song added.

As industrial rents bottom out, Song noted that there is increasing interest from industrialists in acquiring prime space for their operations. "We also foresee increasing interest in logistics and high-specifications industrial properties from qualified institutional investors seeking higher yield," she concluded.

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