Lease Renewal - Singapore Manufacturing Federation

24/01/2014
Presentation by JTC
at Joint SMF-JTC Dialogue
23 Jan 2014
Outline
Manufacturing: A Key Economic Pillar
JTC’s Initiatives
Update on JTC’s Policies: Lease Renewal
Update on JTC’s Policies: Assignment
Land Productivity Grant
Moving Forward
1
24/01/2014
MISSION
To plan, promote and develop a dynamic industrial
landscape, in support of Singapore’s economic
advancement.
VISION
A dynamic industrial landscape; The choice investment
location.
Manufacturing: A Key
Economic Pillar
2
24/01/2014
Manufacturing: A Key Economic Pillar
Building a
diversified
and
resilient
economy
Manufacturing and services
remain twin engines of growth
Manufacturing remains a major economic pillar
Contributing > 20% of GDP
Government will continue to support MNCs and
SMEs, and key industries
Current Challenges
Increasing Global
Competition
Land Constraint
Rising Business Costs
3
24/01/2014
JTC’s Initiatives
Increasing Global Competition
Increasing
Global
Competition
Develop competitive
industry clusters through
integrated and innovative
industrial infrastructural
solutions
4
24/01/2014
Competitive Clusters
Aerospace
Offshore & Marine
Clean Tech
Biomedical Sciences
Energy & Chemicals
Electronics
Infocomm & Media
Precision Engineering
Logistics
Printing
Food
Lifestyle/Furniture
Land Constraint
Create new land and space
Land
Constraint
Develop innovative, highrise solutions & specialised
facilities to improve land
productivity & transform
industries
Optimise land use
5
24/01/2014
27m
Create New Land and Space
20m
Reclamation – Jurong Island and Tuas
Underground – Jurong Rock Caverns
Sea Space – Very Large Floating
Storage
Innovative & Specialised Facilities
JTC Aviation One @SAP
JTC MedTech One
@ MedTech Hub
JTC Surface Engineering
Hub @ Tanjong Kling
JTC Space
@ Tanjong Kling
Paya Lebar iPark
JTC CleanTech One and
Two @ CleanTech Park
Food Zones
Other Ideas…
Food Hub
Multi-User Yard
Integrated Logistics
Hub
6
24/01/2014
JTC Surface Engineering Hub
@ Tanjong Kling
Central Wastewater
Treatment Plant
Multi-tenanted facility for surface finishing industry; mainly
SMEs
Shared facilities to reduce costs; optimise land-use
JTC Space @ Tanjong Kling
Three-storey factories targeted to support SMEs
Build at higher plot ratio to lower land rents
Each unit comes equipped with structural provisions for
companies to install their material handling system
7
24/01/2014
JTC Food Hub @ Senoko
1. Intensify
Land Use
• Bridge market
gap in large floor
plate factories
• Substitute for
low-rise standard
factories
2. Enhance
Competitiveness
3. Enhance
Productivity
• Facilitate quick
start-up
• Support Food
Manufacturing
Productivity Plan
(FMPP) –
“Demand
Aggregation of
Logistics Services”
• Reduce set-up &
operating costs
JTC Food Hub @ Senoko
Location
Proposed Plot Ratio
Proposed NLA
Floors
Average Unit Size
Floor Loading
Vehicular Ramp
Target Completion Date
Senoko Drive
2.59
58,150 m2 (Food)
14,733 m2 (CWF)
72,883 m2 (Total)
Level 1: CWF (14m ceiling height)
Level 2-6: Food Units (7m ceiling height)
1,160 sqm
12.5 – 15 kN/m2 (for factory units only)
40-ft container access
End-2016
8
24/01/2014
Optimise Land Use
Competing uses for Singapore’s limited land resource
Need to improve land productivity to support economic growth
Land has to be allocated to quality projects with high valueadd and which provides good jobs
Stringent criteria for land allocation and lease renewal
Rising Business Costs
Rising
Business
Costs
Ensure sustainable
industrial land supply
Enhance market
transparency
9
24/01/2014
Ensure Sustainable Industrial Land
Supply
Release adequate industrial land supply through IGLS
Shorten project completion period so space can come
on stream faster
Impose technical conditions to ensure space can meet
needs of industrialists
Enhance Market Transparency
JTC has taken on new role of gathering,
analyzing and publishing statistics on the
industrial property market
Purpose is to enhance market transparency of
the industrial property market
First industrial property report to be released by
JTC at end Jan 2014
10
24/01/2014
Update on JTC’s Policies
Lease Renewal
Granting of new lease term, which commences after
expiry of current term
Lease renewal
application
Assessment
and approval
Current lease term
Renewed lease term
Lease renewal is neither automatic nor an entitlement
Given Singapore’s limited industrial land, every application for
lease renewal is evaluated based on:
• Productive use of land to generate economic value
• Alignment with Singapore’s long-term plan for land
11
24/01/2014
Lease Renewal:
Key Assessment Considerations
Redevelopment plans
Sound business plan (land productivity and creation of good jobs)
Investments in plant & machinery (P&M) and building & civil works
(B&C)
Plot ratio and land optimisation (e.g. consolidation of operations)
Rectification of outstanding breach of lease conditions
Housekeeping history (e.g. subletting)
Lease Renewal:
Application Process
About 6 years
Before
3 Years
Before
Lease
Expiry
If renewal is granted:
Application
Early Engagement
commences with proposed business
Site Visit
& Lessee
Assessment
Lessee
submits
an
JTC customer engagement
plans & investments, to be completed within
• JTC customer
online
application
for
officer contacts lessee to discuss
3 years
Notification
engagement
officer of Outcome
lease renewal
business plans moving forward
conducts
JTC
a
notifies
site
visitlessee
If renewal
is not of
granted:
together
outcome
withJTCofwill
lease
renewal
Points for lessee to ponder :• Lease renewal
•
assist
lessee in linking up with
application
form
representatives
application
from
withinof
3 ready-built facilities
• Do I have plans for new
developers
• Business plan
EDBwith
&months
SPRING
of also
application
product lines, capital
• JTC
offers several specialised readydetails •of company’s
Rigorous
joint
submission
investments?
built
developments
catered to SMEs
products
&
services
evaluation
ofIf lessee’s
• Can my operations be located
•
there
are
land
savings,
may be eligible
• Latest annual
reportplans
business
in a smaller site or in high-rise
for Land Productivity Grant (LPG)
or
audited
accounts
space?
• Last 3 yrs of lease generally adequate for
execution of relocation plans
24
12
24/01/2014
Lease Renewal:
Key Terms & Conditions
Renewal term depends on quality of proposed investments, plot ratio,
business plans, etc., as well as redevelopment plans for area
3-year building and investment period
Pro-rating of renewal term, if shortfall in investments and/or plot ratio
Assignment prohibition period is 5 years from fulfilment of investment/
plot ratio criteria or 3 years from start of renewal term (whichever is
later)
Land rental revised to JTC’s prevailing Posted Rent at start of renewal
term
Assignment of Lease
Transfer of lease from seller to buyer
JTC leases limited industrial land to industrialists
on premise that industrialists remain committed to
proposed business plans over sustained period
Yet, JTC recognises that lessee may need to sell
premises in secondary market for genuine business
reasons (e.g. relocation or financial distress)
Need to strike balance between the two factors
above
13
24/01/2014
Assignment of Lease:
Assignment Prohibition Period
Before 15
Nov 13
From 15 Nov 13
New Leases Investment
Period
Investment Period + 5
Years
Assignees
who
Purchased
JTC
Facilities
from
Secondary
Market
Leases ≤ 30 Years
Left
5 Years from
Assignment Date
3 Years
from
Assignment
Date
Leases > 30 Years
Left
10 Years from
Assignment Date
Rationale
• Ensure scarce
industrial land resource
deployed towards
productive economic
activities for sustained
period
• Discourage speculation
and promote price
stability in industrial
property market
Assignment of Lease:
Assignment Prohibition Period
Before 15 Nov 13
All
Lessees
Last 3 Years of
Lease
From 15 Nov 13
Last 5 Years of
Lease
Rationale
• Aligned with longer
assignment prohibition
period from lease
commencement
• Prevent industrialists
from coming in through
assignment in last 5
years of lease in hope of
obtaining lease renewal
14
24/01/2014
Assignment of Lease:
Minimum Occupation Period
Before 15 Nov 13
Anchor
3 Years from
Tenants
Assignment Date
under
Sale-andLeaseback
Scheme
From 15 Nov 13
Rationale
Leases ≤ 30 Years Left • Ensure scarce
5 Years from
industrial land
Assignment Date
resource deployed
towards productive
Leases > 30 Years Left economic activities
10 Years from
for sustained period
Assignment Date
Land Productivity Grant
15
24/01/2014
Land Productivity Grant
Provides funding support to companies interested to
optimise land use through domestic relocation or
tapping resources within immediate region to expand
companies’ economic space
JTC as SPRING’s Approval-In-Principle
Administrator for LPG w.e.f 1 Jan 14
• Cuts down duplication of resources across agencies
• Expedites grant application processing
Possible Scenarios
Scenario 1
Domestic relocation with
land intensification (i.e.
move from bigger land to
smaller land)
Scenario 2
Move out low ValueAdded activities to
immediate region and
replace with higher
Value-Added activities
Domestic
Relocation
Higher
Productivity
SINGAPORE
SINGAPORE
SINGAPORE
DOMESTIC
Scenario 3
Relocate low ValueAdded activities to
immediate region but
maintain backward
linkages
Lower
Productivity
IMMEDIATE REGION
Lower
Productivity
IMMEDIATE REGION
16
24/01/2014
Details
Benefits
• Defray initial relocation costs
▫ Supportable cost components would be one-time, non-capital
expenses related to relocation
• Funding support between 10% and 70% of qualifying
costs
▫ Funding support level dependent on amount of land freed up
and remaining lease term
Qualifying Costs
Relocation costs (i.e. physical movement of Plant & Machinery to new site)
3rd party consultancy fees for market and location feasibility studies and work
flow redesign
Manpower costs of project manager or Singapore-based staff posted to
overseas site to oversee training of local labour and new facility set-up
Application Process
Who can apply?
• Local and foreign enterprises who are:
▫
▫
▫
▫
Physically present and registered in Singapore
Situated on industrial land
Generate minimum land savings of 0.1ha
For overseas relocation, company must demonstrate strong linkages
from relocated activities to activities carried out in Singapore
How to apply?
JTC Customers
Local Enterprises
Foreign Enterprises
Contact
Phone
JTC Cluster Officer
-
Email
-
SPRING EnterpriseOne
6898 1800
[email protected]
EDB Contact Centre
6832 6832
[email protected]
17
24/01/2014
Moving Forward
Moving Forward
Work with EDB & SPRING in
the following areas:
• Upgrade operations and
workflow
• Tap on assistance schemes to
improve productivity and
redesign operations for greater
cost and space efficiency
• Explore high-rise industrial space
solutions
• Strengthen collaboration with
associations and industry groups
to support industry needs
18
24/01/2014
Thank You!
19