The acquisition of the Industrial Government Land Sales (IGLS) land at Lok Yang Way was a calculated maneuver from an industry veteran working in a field where the demands of market shifts are ever-evolving. With a bid of $70.08m, this sale is a timely and site-specific purchase of worth within the western industrial hall in Singapore.
The tender process in itself tells us a lot about how the market behaves if there is competition. Bidding for the 30-year leasehold property was opened by the government's industrial land developer JTC in August and closed in October. With another proposal of $37.69 million the next highest, it is fair to say that Soilbuild believes the site has what it takes to achieve success under its ownership. This works out to a very attractive $1,506.63 per square meter per plot ratio, likely the cheapest number we have ever seen for a B2 site in this vicinity. It speaks to the confidence we have in recognizing a growing demand for modern, state-of-the-art industrial buildings suitable to high-end manufacturing, logistics and automation users.
For this approach the main reason is features of the site. The 18,605.5-square-foot lot is zoned for Business 2 use and therefore can be used for far more than merely heavy manufacturing. In fact, Soilbuild is best known for constructing multi-user ramp-up industrial buildings and this zoning allows for that type of building to be built. The ramp-up design is a major attraction because it allows vehicles to park directly in front of every unit for easier logistics. This is a key operational advantage of businesses that handle large, bulky items, equipment or delivery in bulk. Given that Soilbuild have experience in constructing this type of facility, they were likely confident about winning the tender and hence could afford to bid high for a site that makes sense with their required skill set.
It is also a well-timed acquisition at both macroeconomic and specific site-selection driven level. The Lok Yang Way property is located in Jurong Industrial Estate, an expansive area that is experiencing a period of upheaval. The area is well-placed for bigger government-led moves, such as the construction of a Tuas Mega Port and the Jurong Innovation District. The Tuas Mega Port, for example, would consolidate Singapore's port activities and accommodate larger volumes of marine traffic. That in turn will drive significant interest in logistics and industrial businesses up and down the western corridor. And what Soilbuild is doing to capture some of this demand, essentially, is they are building a new factory along Lok Yang Way.
Another key figure is the price per square meter per gross plot ratio for the location at Lok Yang Way. This sits around $1,506.63, a good price to use as a reference point to compare with the other more recent IGLS tenders and feel out what the market is thinking and their value of it. While prices will of course vary depending on several factors including location and classification, it indicates the price developers are willing to pay for 30 years long lease industrial land that is B2 zoned and located in a great area. They must believe that the ROI at a fancy, ramp-up plant justifies the land investment. Soilbuild is a company with an existing construction arm. Combining land acquisition and development in one place allows them to be vertically integrated, which can create efficiency with costs and completing projects faster.
