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With the mega port already in the works and other exciting developments in the pipeline, the future of Tuas has become brighter than ever.
Exciting days lie ahead for Tuas. Previously a fishing village, it is now one of Singapore’s major industrial areas.
But there are even bigger and better things in store for Tuas. The area has been selected as the focal point of Singapore’s Next Generation Port vision, which will see the creation of a massive mega- port that promises to bolster the republic’s status as a global port and maritime hub.
In addition, increasing connectivity, thanks to the Western extension of the East West MRT line, and proximity to the much-anticipated Kuala Lumpur-Singapore High Speed Rail (HSR), promises to transform Tuas and boost demand for industrial space in the area.
Analysts are very optimistic about the future of Tuas, seeing it as the brightest spot in Singapore’s industrial property landscape.
The port of the future
The Tuas of the future will be vastly different. Earlier this year, the Maritime and Port Authority of Singapore signed an agreement with DIAP-Daelim Joint Venture that looks set to change the face of Tuas.
Under the agreement, South Korean chaebol Daelim will commence work on the first phase of construction of an ambitious new mega terminal, to be developed in four phases over a timeframe of 30 years.
The first phase of development, which officially commenced on 29 April 2016, and is expected to be completed in 2020, is worth $2.42 billion and will involve land reclamation to the tune of 294ha, dredging works in the Tuas basin and Temasek Fairway, and construction of the actual wharf.
The goal is to equip the new terminal with 20 deep-water berths that can accommodate 20 million container units of standard size per year, with a total capacity of 65 million units. The permanent wharf will be formed by 222 caissons measuring 28m, making them some of the world’s largest.
The new Tuas Terminal will be equipped with better technology and hitherto unseen features, making it Singapore’s most advanced port. For instance, there are plans to use land ultra-efficiently, with space both underground and above ground to be optimised to serve ancillary functions, such as storage.
Safety and security will also receive a boost, and a high-tech traffic management system will ensure productivity levels are as high as possible. The new terminal will also be more labour-efficient due to extensive automation. For instance, port equipment and yard cranes will be automated wherever possible, thereby reducing labour costs.
The mega port, which looks set to receive the lion’s share of Singapore’s maritime activity, is expected to transform the area and dramatically raise land values.
Lim Kien Kim, head of Industrial Services at Colliers International, Singapore, is optimistic about the future of Tuas. He says, “With plans to move the current port at Tanjong Pagar to Tuas Mega Port, the concentration of industrial activities will most likely gravitate towards the Tuas Planning Area in the future.
“While the current industrialists in (the) Tuas Planning Area are predominantly multi-national corporations (MNCs) occupying large industrial spaces, supporting trades of these industries are likely to relocate closer to these companies in a bid to reduce their operating costs. Hence, multiple-user industrial developments in the locality will be able to offer this space alternative to these supporting trades.
“Small and medium-sized enterprises (SMEs) in supporting trades typically do not require large spaces, and could take up space in multiple-user factory units for their business activities. It is expected that there will be a growth in SMEs relocating to Tuas, tapping on the existing presence of large industries and the improved infrastructure.”
The Tuas South area is also home to Tuas Biomedical Park, which is dedicated to biomedical manufacturing and houses the premises of a range of pharmaceutical and other biomedical enterprises. Elsewhere in Tuas South, Singapore Lube Park, which houses facilities dedicated to lubricant production, is the first shared-facilities park of its kind in Asia. Tuas also has a strong construction presence, with many construction companies and supporting businesses basing their operations in the area.
Better connectivity
By the end of 2016, connectivity in Tuas is going to be vastly improved, which will enhance the attractiveness of Tuas as an area in which to work or base business operations.
Up till now, Tuas’ location in Singapore’s far West has meant that the PIE and AYE provide the only means of access there. However, upcoming developments are going to completely change that.
For starters, the MRT system’s East-West Line will be extended beyond Joo Koon to Tuas Link, a development slated for completion in late 2016. Four new stations, Gul Circle, Tuas Crescent, Tuas West Road and Tuas Link will boost connectivity to Tuas.
The location of the future Singapore – Kuala-Lumpur High Speed Rail in Jurong East could boost traffic to Tuas even more. The terminus, which according to a 5 May 2015 announcement will be located at Jurong East, should be conveniently reachable by MRT from Tuas.
When the HSR is completed, the 350km journey from Kuala Lumpur to Singapore will take just 90 minutes. This could cause a significant hike in Singapore-Malaysia economic integration.
Mr Lim says, “The attraction of talent and suitably skilled professionals to work in the Tuas vicinity will probably be less challenging with the improved connectivity to the rest of Singapore after the completion of the MRT line extension.”
Future site launches
Tuas continues to feature strongly in the Ministry of Trade and Industry’s (MTI) Industrial Government Land Sales (GLS) launches.
In the most recent launch for the second half of 2016, there are seven sites on the Confirmed List and five on the Reserve List, spanning a total area of 11.7ha. Four of the sites on the Confirmed List are situated in Tuas, as well as four on the Reserve List. Each confirmed site will have tenure of 20 years.
In 2014, JTC imposed stricter rules on subletting which has affected rents and the availability of industrial space for rent. These new rules restrict a main occupier of a JTC site to renting out not more than 30%, down from 50%, of the premises to non-anchor subtenants. This raises the attractiveness of purchasing rather than renting industrial space .
Given existing plans to turn Jurong East into Singapore’s second CBD, as well as robust development in the Jurong Lake District, Tuas’ Western location looks set to become a strong advantage.
Price trends
Tuas is widely regarded as Singapore’s hottest industrial area at the moment, so strong demand is expected moving forward.
Industrial prices and rents are falling at present, making it an excellent time for investors to enter the market. The first quarter of 2016 also saw lower transaction volumes island-wide for warehouses and upper-floor strata-titled factory units.
More specifically, in the Pioneer-Tuas area, monthly gross rentals for upper-floor units in conventional industrial space fell from $1.93 psf in Q4 2015 to $1.77 psf per in Q1 2016. However, they rose from $1.79 psf in Q1 2016 to $1.88 psf in Q2 2016.
The rental demand might have been sustained by JTC’s 2014 rules on subletting. These new rules restrict a main occupier of a JTC site to renting out not more than 30 percent%, down from 50 percent%, of the premises to non-anchor subtenants. This raises the attractiveness of renting from multi-user developments, or outright purchasing of own units.rather than renting industrial space.
Mr Lim is upbeat about the investment potential in the Tuas Planning Area and does not think the current soft market conditions are cause for concern.
He advises, “Although the current rental yields may be weak due to the ongoing muted market conditions, the impending improvement in the existing infrastructure and connectivity is likely to bring about a positive impact in the Tuas Planning Area. This will most probably drive an upward demand for industrial spaces in the locality.”
One of the upcoming developments in area is the B2 industrial building, Shine @ Tuas by Beacon Properties. (Artist’s impression) (Source: Beacon Properties)
Upcoming developments
Tuas continues to enjoy a robust inflow of new developments, cementing its current status as Singapore’s most exciting area on the industrial property market.
For instance, one of the upcoming developments in the area is Shine @ Tuas South by Beacon Properties, located at 11 Tuas South Link 1, close to the site of the anticipated Tuas Mega Port. The six-storey ramp-up development will house 179 B2 industrial units, including an industrial canteen and 4 shops (minimarts), and its Temporary Occupation Permit (TOP) is expected to be no later than January 2019.
JTC also has a slew of developments in store for the Tuas area. The hotly anticipated JTC Chemicals Hub @ Tuas South is already a landmark there. The high-rise development is the first of its kind and caters to chemicals enterprises with special safety needs.
JTC Space @ Tuas is an integrated development which will contain industrial space, an amenities centre, a dormitory and a multi-storey carpark which can accommodate heavy vehicles.
Tuas Link Mall, which will be integrated with the upcoming Tuas Link MRT station, will feature tenants such as H&M and Uniqlo.
The Tuas as we know it will be completely transformed in the years to come, making it a very exciting area to watch for savvy investors.
This article was sponsored by Beacon Properties
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