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THREE industrial land sites totalling 4.1 hectares are on the latest confirmed list of the Government Industrial Land Sales Programme. They are significantly smaller than the five sites totalling 12.9 ha put on the list for the first half of this year.

The Ministry of Trade and Industry (MTI), which yesterday released the three industrial sites, said that the sites were put on the list 'in view of the demand for industrial land'.

Market watchers say that reduced number and size of sites on the confirmed list is a prudent move by the government to dispel worries about a glut of industrial space.

Instead, MTI also released another three sites with a combined land area of 10.8 ha on the reserve list - larger than the five sites totalling 8.9 ha put on the reserve list for the first half of 2006.

'This will let the market drive the demand,' said Colliers International's managing director Dennis Yeo.

Sites on the reserve list require a bid - or trigger price - that meet the minimum bid requirements in order for the site to be put up for public tender.

In the process, the trigger price is made public. For sites on the confirmed list, there is no trigger price and bidders can offer whatever they see fit.

By skewing the availability more towards sites on the reserve list, the government ensures that should buyer interest be strong, there are enough sites on the market for developers and end-users to purchase.

However, there is no 'force-feeding' of the market, said Mr Yeo.

Market observers believe that demand for the confirmed sites should be good as the economy is improving - which could be seen as a call for more sites to be released.

'I think it (the three sites) is a good thing, as the market sentiment has picked up,' said CB Richard Ellis' (CBRE) director of industrial services Bernard Goh. 'The sites on the confirmed list are likely to be bought.'

One site in Woodlands Industrial Park, whose tender closed recently, saw eight bids in all by mainly building and construction companies.

This time around, rather than developers snatching up the sites, the small sizes of the three sites on the confirmed list means that end-users might be tempted to make bids. End-users (such as manufacturers) usually require smaller sites.

Perhaps to allow end-users to participate in the bidding process, the sizes of individual sites have fallen over the years.

According to Mr Yeo, in the mid- to late-nineties most sites were typically larger than 5 ha.

The release of the eight sites - both on the confirmed and reserve lists - come as industrial property occupancy rates in Singapore are forecast to continue rising.

According to a recent report by CBRE, average rents for factory space and high-tech space increased by 5.7 per cent to $1.85 per square foot in the first quarter of 2006 - for the first time since 2003.

'Looking ahead, industrial properties should enjoy higher occupancy rates and moderate rises in rents for the rest of the year, with the investment market showing more activity for the second half of the year,' said CBRE.