WITH their tennis courts, swimming pools and barbecue pits, the new wave of industrial developments opening their doors in 2015 and 2017 almost resemble residential properties in terms of the facilities they offer.
One example is Tagore Lane’s Business 1-zoned Tag.A. Instead of projecting the utilitarian image associated with industrial properties, Tag.A has a glossy facade and houses a rooftop pavilion, swimming pool, basketball court, gym and barbecue pits, among various facilities.
New strata-titled industrial developments touting amenities such as those offered by Tag.A have been selling well and target ambitious young businesses, noted Oxley Holdings chief executive officer Ching Chiat Kwong.
Oxley is behind four such properties, three of which have sold all their units, said Mr Ching. He added that 65 per cent of units have been sold at Oxley’s most recently launched development with similar features, Eco-Tech @ Sunview, which comes equipped with a basketball court.
“Developers (want) to differentiate their products with these facilities,” said CBRE head of research Desmond Sim. “It’s the ‘Milo dinosaur’ effect. If you don’t put a heap of Milo powder on it, it’s ‘iced Milo’ – you can sell it for only half the price. (If) you can term it something special, then people will choose the product and pay more.”
The people choosing these products are a younger generation looking for alternatives to the “cold, clean kind of look” typical of industrial properties, he added.
Colliers International executive director Tan Boon-Leong agrees: “Nowadays . . . buyers are more sophisticated. Gone are the days when you’re selling a factory with smoke coming out of the chimney.
“You’re going to hire the degree holders. (With these facilities) your value-added quantum is higher. So the professionals are the ones you’re trying to attract,” he added.
In an increasingly competitive talent market, these facilities contribute “to companies being able to secure and retain the best talent”, said Cushman and Wakefield managing director Toby Dodd.
Another practical consideration is the boost in sales these facilities could offer upper floors. These are typically the hardest floors to sell in an industrial property, said Mr Tan, but a view overlooking a swimming pool could change that.
“It will add value to the upper floors. (Otherwise) who would want to ramp up all the way to the 10th storey?”
Sales are not the only side to these properties’ value coin; the developments should also command higher rentals because of the increased maintenance fee burden that the recreational facilities place on owners.
However, once these projects are granted their Temporary Occupation Permit, they do not seem to command a premium rental compared to traditional offerings, said OrangeTee head of research and consultancy Christine Li.
One example cited by SLP Research is UB.One, a basic industrial project whose $2.88 per square foot per month average asking rent tops that of the two recreation-ready projects located nearby: Oxley Bizhub and Oxley Bizhub 2. The three projects were completed within two years of each other, said SLP.
There are several possible reasons why these facilities may not be as well received. “Some SME bosses are concerned that their workers might get distracted by these facilities and hence become less productive at work,” Ms Li said.
Mr Tan wonders how many employees would be comfortable swimming in a pool where their colleagues and bosses can see them from their cubicles. A possible explanation for the way sales have outperformed rentals is that these developments appeal to some investors, said SLP research head Nicholas Mak.
“While the lifestyle facilities may appear appealing . . . the most important factors to end-users are the accessibility, the usability (in terms of suitable specifications) and the business synergy with other companies in the vicinity,” said Mr Mak, adding that this explains why these projects tend to attract more investors than end-users.
Investors who are used to buying residential property but are new to the industrial market are the ones attracted to these properties, he said.
He believes that after the government implemented property- cooling measures such as the additional buyer’s stamp duty (ABSD) and the total debt servicing ratio (TDSR), these investors may have moved to the industrial market, drawn to industrial properties with familiar, premium residential features.
Recreational facilities remain deal sweeteners, said CBRE’s Mr Sim. “Learned investors will still look at the basics . . . price, location and the potential of the product being launched.”