[SINGAPORE] As property investors turn their attention to the industrial segment following the introduction of the additional buyer's stamp duty late last year, they would do well to note the differences between investing in industrial property and residential property.

Several potential buyers may have misunderstood the pricing at some new industrial property launches, BT has learnt.

Said one such buyer, Giri Agarwal: "The price that was advertised was $750 per square foot (psf) for a freehold property. I found that attractive and made a deal by giving a cheque to the agent. However, when I went into greater detail about the property that I intended to purchase and the exact size of the unit, the agents turned evasive and tried to avoid my questions.

"This triggered in me a desire to dig further and I discovered that the area they (the developer) intended to charge me for was twice the size of the actual unit. So, for instance, if the unit was said to have a strata area of 1,000 square feet (sq ft), it was actually only 500 sq ft."

To shed some light on the rationale behind the pricing - developers in Singapore tend to base the per square foot breakdown of an industrial unit on the total floor area as well as the potential mezzanine level that can be built within a high ceiling unit (also known as void space), potentially offering the owner twice the floor area.

However, as the actual unit is usually not delivered with a built-in mezzanine level upon TOP, some argue that the pricing strategy adopted by the developer could be somewhat misleading - especially to new investors.

In response, a spokesman for the Urban Redevelopment Authority (URA) said: "The total floor area in the strata title is the total sum of the gross floor area and other areas such as air-con ledges and void areas . . . However, advertising units for sale based on total floor area for sale indeed does not give prospective buyers a clear picture of the gross floor area of the property."

Explaining why there has not been an amendment to the rules to address this potentially grey area, the URA spokesman said: "Traditionally, industrial and commercial properties buyers are more sophisticated and discerning investors from the business sector. We have therefore not amended our rules to mandate a more detailed breakdown of floor areas as we had done for private housing."

Some buyers have also complained that a number of salespeople at industrial launches did not have the requisite knowledge to sell such spaces, as many come from a residential sales background.

Said Purnima Shantilal, director of licensing and investigations at the Council for Estate Agencies (CEA): "Under the CEA's Code of Ethics and Professional Client Care, estate agents and salespersons must not perform estate agency work unless they have the relevant knowledge to perform the work that they are engaged to perform. Hence, a salesperson must possess the necessary knowledge of the industrial property sector before undertaking the marketing of an industrial property."

However, what is advocated in theory might not necessarily be practised in the real world, noted consultants.

One consultant told BT: "It is of utmost importance that agents should be well equipped with knowledge of industrial spaces and their allowable uses. Unfortunately, it is not regulated by the CEA or relevant authorities that agents marketing such industrial properties need to be trained . . . plainly put, any CEA-licensed agent would do."

Industry watchers concur that the authorities should address this matter soon, given the segment's growing number of retail investors who are clueless about pricing practices.

Consultants suggested that the authorities impose a rule requiring a more detailed and accurate breakdown of each saleable unit by developers, to prevent further misunderstandings from occurring.