Friday, 21 October 2016

HDB industrial land, properties to come under JTC

Streamlining of operations aimed at supporting SMEs, and making things easier for tenants, lessees
By Wong Siew Ying, The Straits Times, 20 Oct 2016

Industrial land and properties under the HDB will soon be transferred to JTC Corporation (JTC) to better support the growth of small and medium-sized enterprises (SMEs).

The aim is to streamline operations under JTC to make life easier for tenants and lessees, who will have to deal with only one agency.

About 10,700 industrial units and 540 industrial land leases will be consolidated under JTC in the first quarter of 2018.

Announcing the move, Trade and Industry (Trade) Minister Lim Hng Kiang yesterday said: "JTC will also be able to better match companies' space needs across the different stages of their growth with a larger supply of industrial land and space, including its innovative facilities."

HDB's industrial estates are found in the central, and east and north-east regions. JTC's industrial estates are largely in the west.

The types of industrial properties under HDB are industrial complexes, industrial shops, standard factories and terrace workshops. They include Sin Ming Industrial Estate, Defu Industrial Estate, AMK AutoPoint and factories in Woodlands and Bukit Batok, among others.

Most of HDB's industrial tenants and lessees are micro-SMEs, with average annual sales of less than $1 million. About half of these are in the engineering and consumer products sectors.

Minimal disruption to those affected

HDB and JTC have vowed to ensure minimal disruption to business for affected tenants and lessees, who will continue to be served by the same team of HDB officers. About 160 HDB officers will be transferred to JTC as part of the initiative.

Terms, conditions and contracted rents in existing HDB lease and tenancy agreements will not change.

Companies told The Straits Times that parking all public sector industrial properties under one agency will lift convenience and efficiency.

"You don't have to deal with two different groups of people... you can focus on building a relationship with one agency," said Flexi Systems manager April Yang.

Flexi Systems, a waste-water treatment and food-waste management firm, has space at JTC's property in Joo Koon Circle, and this year took additional space at HDB's Woodlands Industrial Park E5.

Mr Lim said the consolidation will allow the Government to undertake more "holistic and comprehensive master planning of industrial estates across Singapore". He noted: "This will enable us to better cluster complementary activities and integrate activities along the value-chain."

He was speaking at a signing ceremony at which three firms inked tenancy agreements with JTC. The trio - Crizto Singapore, Guoxin Manufacturing and Royal Bussan Singapore - will be the first tenants at JTC Space @ Tampines North, which will get its temporary occupation permit next month.

The $72 million nine-storey facility caters to heavier manufacturing activities and can support advanced manufacturing technologies.

Mr Richard Foo, managing director at Guoxin Manufacturing, which now has premises in Tuas and Ubi, said: "It helps to improve productivity... Cost savings from the relocation would be about 40 per cent, with 25 per cent savings on rentals."

The HDB and JTC will engage tenants and lessees, as well as relevant business associations over the next two months to address their concerns about the transition.

SMEs welcome added convenience of one-stop shop
By Wong Siew Ying, The Straits Times, 20 Oct 2016

Small and medium-sized enterprises (SMEs) were largely in favour of having a one-stop shop to handle public sector industrial facilities, citing increased convenience as the key benefit.

In early 2018, industrial land and properties under HDB will be transferred to JTC Corporation.

Many SMEs believe JTC, with its finger on the pulse of industries' needs, will be well placed to help firms grow. But they also flagged some concerns, notably on rental rates when leases are up for renewal. "A worry is will JTC one day decide to sell the HDB factories to Reits or the private sector. If so, the rents could go up and that may be worse for SMEs," said Mr Tay Meng Leong, a director at City Tyre Auto, also the president of Sin Ming AutoCare Merchant Association.

City Tyre Auto occupies space at HDB premises in Sin Ming AutoCare and AMK AutoPoint, paying rent plus a conservancy charge of $6,000 to $6,500 per month for each location.

JTC sold some of its industrial space to the private sector - Mapletree Investments, Soilbuild Group Holdings and Mapletree Industrial Trust - in 2008 and 2011.

Rentals could also rise if JTC undertakes massive redevelopment of HDB's industrial units, 75 per cent of which were built in the early 80s.

Mr Nicholas Mak, executive director at SLP International Property Consultants, said: "Most of HDB's industrial properties are quite old. So there is a potential that JTC may redevelop them in the future. Should that happen, rents may go up in tandem."

Concerns aside, firms are heartened that the existing HDB team handling industrial property matters will be transferred to JTC. "The initial concern is whether JTC can adequately address the needs of micro-firms since JTC deals mostly with the big companies. But this concern is minimised as firms will still work with the HDB officers," said Meiban Group chairman George Goh.

JTC currently oversees 5,600 industrial units and 3,100 land leases, covering about 7,400ha of land. After the transfer, the numbers will increase to 16,300 industrial units and 3,640 land leases, covering 8,100ha of land.

Meeting needs of industrial space
By Wong Siew Ying, The Straits Times, 21 Oct 2016

The Housing Board's several thousand industrial units will all be administered by JTC Corporation from the beginning of 2018.

This means businesses looking to expand will need to work with only one agency instead of two as is the case now. That should cut down on administrative processes and duplication of work.

The consolidation - it will involve moving HDB's 10,700 industrial units and 540 industrial land leases to JTC - comes at a time when the Government is encouraging firms to innovate and try out new business models.

As companies do that, their needs for industrial space could change.

A manufacturer operating out of an older HDB industrial property, for example, will need bigger premises with high technical specifications if it decides to automate. JTC has those.

Having a full suite of industrial facilities under JTC means the firm's needs could be forecast through regular engagements between landlord and tenant.

This way, the firm's growth strategies and any change in demand for space could be anticipated and planned for, taking it from start-up stage through to a small and medium-sized enterprise and subsequently, a player with a global footprint.

JTC, which is part of the Ministry of Trade and Industry, is also seen to have a better grasp of economic and business trends than the HDB, which is in the National Development Ministry and more commonly associated with public housing.

The HDB and JTC will engage tenants and lessees to iron out any issues relating to the consolidation of industrial land in the coming months.

Chief among them would undoubtedly be concerns over future rental hikes and potential redevelopment plans for HDB's industrial properties.

Both agencies have assured a seamless transition, with existing lease and tenancy agreements and contracted rent remaining unchanged.

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