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Woodlands: Industry's magnetic north

13 September 2018

Woodlands: Industry's magnetic north

Plans for the area, its sizeable demographics and modern industrial space are salient points.

GIVEN the recent cooling measures affecting residential property purchases in Singapore, some investors could turn to alternative real estate investment classes such as industrial properties.

This segment has opportunities, areas of growth, as well as challenges. Location is also a very important consideration. One area in Singapore that is attracting the attention of investors and industrialists is Woodlands, in the northern part of the island.

Rising star in the north

Recently, the government announced plans for the future development of Woodlands. The two most relevant development proposals that will have signficant impact on the Woodlands industrial property market are the North Coast Innovation Corridor (NCIC) and the Woodlands North Coast.

The NCIC is slated to be a new economic corridor in the north. It will start from the Woodlands Regional Centre and stretch across the redeveloped Sembawang Shipyard, to the future Seletar Regional Centre and Punggol Digital District.

The Woodlands North Coast - which is envisaged as a business cluster within the Woodlands Regional Centre - will form one in a belt of key growth nodes across Singapore's north and north-eastern area, bringing jobs closer to homes.

This cluster will be well-connected to the upcoming Thomson-East Coast MRT Line and the cross-border rail link to Johor. Therefore, it could benefit from the development of Iskandar Malaysia in Johor.

The North-South Corridor, a 21.5-km road linking Woodlands to the Singapore CBD, is also likely to be ready by 2026. The expressway will improve connectivity of Woodlands to the rest of Singapore.

Hence, the business hub in Woodlands could attract industrialists and enterprises, especially those with business connections to Malaysia. According to the government, the development of Woodlands Regional Centre could create an estimated 100,000 jobs here.

Woodlands industrial property price & rentals on the mend

The transacted prices and rental rates of industrial properties in Woodlands have begun recovering this year based on reported sales records. After falling for three years from 2014 to 2017, the median transacted price of 60-year leasehold industrial strata-titled units in Woodlands increased by 3.4 per cent to S$397 per square foot (psf) in the first seven months of 2018 from 2017.

Transacted industrial property rentals in Woodlands have also improved modestly in 2018 after reaching a trough in 2015.

The median rentals in the January to July 2018 period stood at S$1.43 psf per month, which was an improvement of 2.9 per cent from the median rentals in 2017 and a 9.2 per cent increase from that in 2015.

Besides the attractive attributes of Woodlands, other factors may also have contributed to the improvement in industrial property prices and rentals for the area.

In the past few years, the government's plans to redevelop the ageing landed industrial properties in Paya Lebar and Defu industrial estates had forced industrial businesses in these two estates to relocate. Some found that the suitable replacement industrial space in the north-east and eastern parts of Singapore were either limited or more expensive.

As a result, these businesses relocated to the northern region, where there was a larger supply of industrial space that catered to their needs and was closer to their current location.

Two industrial project launches in Woodlands in recent years - Mega @ Woodlands and Woodlands Connection - have enjoyed encouraging take-up.

At Woodlands Connection, which was launched in the first quarter of this year, all 26 strata-terrace factories have been sold. At Mega @ Woodlands, more than 60 per cent of the project's 517 units have been taken up since sales began three years ago.

Population catchment

One advantage enjoyed by industrialists located in Woodlands is the proximity to the residential estates there.

Industrial businesses can tap the resident population catchment to hire labour. The accessibility to a large labour force is an important consideration to many businesses. In return, the residents in Woodlands would have employment opportunities near their homes, resulting in a win-win situation.

According to the Singapore Department of Statistics, the current resident population in Woodlands is estimated at 250,000. Using a straight-line projection, the projected population there by 2040 is estimated to be 268,000, which means an additional 18,000 residents. The large and growing population in Woodlands is another attraction for industrialists to locate their businesses there.

Despite the strengths and exciting developments in and around Woodlands, its shortcoming is that it is not near a sea port.

The major container port is in the southern part of Singapore. That said, industrial businesses that require frequent shipments of goods and materials from Malaysia would be drawn to the north.

The industrial real estate landscape in Woodlands is projected to be transformed by the promising development and infrastructure plans for the region.

Together with its positive inherent characteristics such as the large resident population, geographical proximity to Malaysia and the availability of modern industrial space, Woodlands is indeed the rising star in the north that many businesses would find attractive.



Reference: Woodlands: Industry's magnetic north, Business Times


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