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Industrial rents in Singapore to moderate in 2020

By Charlene Chin

/ EdgeProp Singapore |

April 16, 2020 6:03 PM SGT

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SINGAPORE (EDGEPROP) - Industrial rents for most micro markets in Singapore are projected to moderate in 2020, given the impact of Covid-19.

The majority of firms have been observed to shelve plans to relocate and instead renew their current lease, pushing down the volume of new leases, says Cushman & Wakefield (C&W).

With an increased reliance on e-commerce during the “circuit breaker” period, cold-chain logistics facilities are likely to register heightened leasing activity moving forward, says Christine Li, head of research, Singapore and Southeast Asia, at the firm.

Location will also be key in determining rental growth — those located in remote locations are expected to be more affected by the viral outbreak.

Despite the sombre outlook, there have been some developments in the sector. GrabFood in January launched its first cloud kitchen at Lam Soon Industrial Building. Spanning 6,000 sq ft, the centralised facility will allow F&B players to serve new areas by renting cooking space without setting up a restaurant.

German event organiser Deutsche Messe also signed a memorandum of understanding with the Singapore Tourism Board and SingEx to host the flagship manufacturing trade show, Industrial Transformation Asia-Pacific, in Singapore for the next five years, speeding up the adoption of Industry 4.0 technologies in manufacturers across Asia-Pacific, says C&W.

Deutsche Messe will be setting up its regional headquarters in Singapore.

ExxonMobil has also committed a multi-billion dollar investment to implement new technology at its integrated refining and petrochemical complex in Singapore. Once the facility is upgraded, it will create 135 jobs and its capacity to produce high performance lubricant base stocks, ramping up production of cleaner fuels by 48,000 barrels per day.

Real estate investments in the industrial sector recorded $606.8 million in transaction volumes, a 22% q-o-q fall. The bulk of transactions came from Ascendas REIT’s acquisition of a 25% stake in Galaxis for $102.9 million ($629 psf), Ascendas REIT’s Gulab sale and the Biopolis 6 price and concept tender.

Other transactions by the REIT include the sale of 202 Kallang Bahru, the former Hyflux Building and the sale of 25 Changi South Street 1 to Hao Mart.

“Investment sales for quality assets like business parks and logistic buildings will still be of interest to many investors,” says Brenda Ong, executive director and head of logistics and industrial, C&W.

“Many have put on hold their acquisition plans but we anticipate activity to return once the Covid-19 situation eases.”

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