BT : Upturn for JTC ready-built facilities

Business Times - 13 May 2010

Upturn for JTC ready-built facilities

Q1 net allocation turns positive after 6 negative quarters

By UMA SHANKARI

JTC Corp said yesterday that net allocation of its ready-built facilities (RBF) returned to positive territory in the first quarter of this year after six consecutive negative quarters.

Net allocation hit 8,900 square metres in Q1 - a turnaround from Q4 2009, when it fell 1,300 sq m - the government agency said in its quarterly facilities report.

JTC previously said in its Q4 2009 report that net allocation had turned positive during that quarter, but revised numbers released yesterday show that net allocation was still negative in the fourth quarter of last year. Net allocation only turned positive in Q1 2010, JTC said.

The turnaround was supported by the standard factory and business park segments which recovered to register positive net allocations of 6,300 sq m and 100 sq m respectively.

Stronger demand also boosted the occupancy rate for RBF, which rose 0.3 percentage point to 97.4 per cent in Q1.

Year on year, net allocation of RBF turned around the negative 8,900 sq m in Q1 last year. But occupancy rate in Q1 this year was still lower than the 97.7 per cent recorded in Q1 last year.

JTC said that gross allocation jumped in the first three months of this year as the manufacturing sector took up more space. Just over half of the gross allocation of RBF space (51 per cent) went to the manufacturing sector, supported by higher take-up from the precision engineering segment. Analysts have said that industrial rents showed signs of recovery in the first three months of this year.

'With the economy on the growth path, the industrial rental market is expected to bottom in 2010,' said Chua Chor Hoon, DTZ's head of research for Southeast Asia. But recovery will be slow because new supply is set to come on stream, she said.

According to DTZ Research, new supply of 9.3 million and 8.3 million sq ft is expected in 2010 and 2011 respectively - slightly below the historical 10-year average new supply of 10 million sq ft.

JTC also said in its report that net allocation of its prepared industrial land (PIL) stayed positive in Q1 2010. Net allocation of PIL was 23.2 hectares - down from an exceptionally strong 105 ha achieved in the previous quarter.

Year on year, net allocation rose 65 per cent from 14 ha in Q1 last year.

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