Industrial property in Singapore has seen a big deal recently as four adjoining industrial warehouse properties at 10, 20, 30 and 40 Tuas South Street 1 were sold by Far East Organization to StarNova Capital for $322 million.
The landmark transaction is one of Singapore’s largest private industrial land deals and shows the increasing investment interest in large scale industrial properties with redevelopment potential.
The four properties cover approximately 1.17 million square feet of land and are located within Singapore’s established Tuas industrial estate. The site is zoned Business 2 (B2) with a gross plot ratio (GPR) of 2.5 which presents significant future development potential for industrial and logistics use.
The acquisition also demonstrates the increasing importance of Tuas as an industrial location (with Tuas Mega Port under development and Singapore’s logistics and supply chain infrastructure expanding).
10, 20, 30 & 40 Tuas South Street 1 Sold for $322 Million
Far East Organization has agreed to sell four adjoining industrial warehouse properties at 10, 20, 30 and 40 Tuas South Street 1 to StarNova Capital for a total consideration of $322 million.
The deal was transacted by Colliers Capital Markets and Investment Services team. It was well received in Singapore’s industrial property market as the land area involved was large and redevelopment potential was high.
The four properties total 1.17 million square feet of land; gross floor area (GFA) is about 608,000 square feet.
With a gross plot ratio of 2.5, the maximum gross floor area allowed on site is about 2.93 million square feet (assuming planning parameters and development approvals are met).
The purchase price is therefore about $110 psf ppr (gross floor area per plot ratio) on the maximum permissible gross floor area.
The properties are held on a 60-year leasehold tenure commencing in 1996 so the site had around 30 years remaining at the time of sale.
This large industrial land purchase gives the new owner an opportunity to convert the existing warehouse properties into a modern industrial and logistics development.
Property Overview of 10, 20, 30 & 40 Tuas South Street 1
The four properties are in the western industrial belt of Singapore and form a large industrial land holding in Tuas South.
The existing developments are single storey warehouse buildings which have historically supported industrial storage and logistics activities.
One of the main attractions is the difference between gross floor area as it exists now and maximum development potential under planning parameters for site.
The large area allows the new owner to pursue more intensive industrial development (e.g. warehousing, logistics and distribution operations).
Key property information:
| Property details | Information |
|---|---|
| Development | 10, 20, 30 & 40 Tuas South Street 1 |
| Location | Tuas South, Singapore |
| Seller | Far East Organization |
| Buyer | StarNova Capital |
| Transaction price | $322 million |
| Land area | Approx. 1.17 million sq ft |
| Existing GFA | Approx. 608,000 sq ft |
| Potential maximum GFA | Approx. 2.93 million sq ft |
| Zoning | Business 2 (B2) |
| Gross plot ratio | 2.5 |
| Tenure | 60-year leasehold |
| Lease commencement | 1996 |
| Transaction rate | Approx. $110 psf ppr |
| Marketing agent | Colliers |
About StarNova Capital?
StarNova Capital is the joint venture set up to acquire and redevelop the four industrial properties at Tuas South Street 1.
The investment partnership brings companies with experience in construction, engineering, logistics, warehousing and real estate investment together. Its shareholders are HPC Realty, CWT, Lexing and O2 Realty. HPC Realty has 47% interest in the JV; CWT holds 25%; Lexing owns 23%, O2 Realty owns 5%.
The construction experience and logistics industry knowledge gives the partnership a platform to take forward the industrial redevelopment. For StarNova Capital it is an opportunity to build a large industrial and logistics facility in one of Singapore’s key industrial locations.
Strategic Location Within Tuas Industrial Estate
Tuas is one of Singapore’s major industrial and logistics destinations. The area accommodates manufacturing, engineering, marine services, warehousing, freight forwarding and distribution.
10, 20, 30 and 40 Tuas South Street 1 offer access to an established industrial cluster with businesses supporting the industry as well as infrastructure serving companies in western region. The area is also served by connectivity to Ayer Rajah Expressway (AYE), Pan Island Expressway (PIE) and Tuas Second Link.
For businesses involved in international trade and regional distribution the proximity to Malaysia via Tuas Second Link is an additional factor. Tuas Link MRT Station on the East-West Line also serves the wider industrial district so employees and workers can travel by public transport.
Business 2 Zoning and Industrial Redevelopment Potential
The four properties are zoned Business 2 under the Urban Redevelopment Authority Master Plan. Business 2 zoning generally supports heavier industrial activities (manufacturing, engineering, warehousing and other industrial operations) provided planning and environmental requirements are met.
With a gross plot ratio of 2.5 and approximately 1.17 million square feet of land, the site has maximum potential gross floor area of approximately 2.93 million square feet. This is an increase over the existing gross floor area of approximately 608,000 square feet. The difference gives us an opportunity to increase land utilisation through a new industrial development.
For industrial developers a large land parcel zoned B2 can provide flexibility when planning warehouse layouts, loading facilities, vehicle circulation and supporting industrial infrastructure. The final design of the development and floor area achievable will depend on approvals from relevant authorities and technical requirements.
Proposed Multi-Storey Ramp-Up Logistics Facility
StarNova Capital plans to redevelop the warehouse properties into a modern multi-storey ramp-up logistics facility. This proposed development reflects the need for efficient warehouse and distribution facilities in Singapore.
Unlike single storey warehouses, multi storey ramp-up facilities have vehicles entering different floors via integrated ramps. This allows logistics operators to handle goods at multiple levels. Some features of a modern logistics development might be large warehouse units, loading and unloading areas integrated with each other, vehicle circulation systems, high capacity storage facilities and operational infrastructure.
The large landholding also offers opportunities to explore different configurations to suit logistics operators with different operational needs. According to the reported redevelopment plans, 77% of the total site is earmarked for redevelopment into logistics and industrial use and the remaining 23% may be sold separately.
The proposed strategy also includes an initial leasing phase to generate income before eventual asset sales. These plans remain subject to planning and development approvals.
What Does This $322 Million Deal Mean for Singapore Industrial Property?
The sale of 10, 20, 30 and 40 Tuas South Street 1 for $322 million shows how much investment interest is still out there in Singapore’s industrial property market. Large industrial land parcels are increasingly being targeted by developers and institutional investors as opportunities to create modern industrial/logistics facilities.
The transaction also shows how industrial property valuation is about more than the existing building structures. Land tenure, site area, zoning, plot ratio, redevelopment potential, location and future demand from industrial occupiers are all important considerations.
Industrial property owners in Tuas and other established industrial estates can use major transactions as market references when evaluating their holdings. However the $110 psf ppr transaction rate needs to be understood in terms of the large land area, leasehold tenure and development parameters of the site. It should not be applied directly to smaller industrial properties without taking into account their specific characteristics.
