Article Topic – Managing industrial property costs

Business Times, Monday, 25th Jun 2012

Will the move to halve industrial land tenure really help contain industrial property costs and rents, and lower business costs? Could its effectiveness be boosted by some other property-related measures, and if so, what?

THEORETICALLY, halving industrial land tenure will help to directly lower business costs – for those that opt to purchase industrial properties outright as lower land tenure will bring down quantum prices of the properties.

For businesses that may not have the financial muscle to invest in industrial properties, the question is to what extent reducing land tenure can help moderate rental prices.

My view is that any easing of rental prices resulting from this new measure may only be slight as we have to look at it from a macro perspective – the role that the economy, with its ebbs and flows, will continue to play in the overall demand and supply of the rental market for industrial properties.

Another point to note is that this initiative is likely to mainly benefit businesses in certain sectors where location is not an important criterion, such as manufacturing and logistics.

Ronald Lee
Managing Director
PrimeStaff Management Services Pte Ltd

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