S'pore is 20th most pricey industrial location

SINGAPORE is now the world's 20th most expensive industrial spot, moving up six places last year on higher rents and land prices, according to a report by real estate consultancy Cushman & Wakefield.

This makes it Asia's fourth most expensive industrial space after Tokyo, which is ranked third worldwide, Hong Kong, ranked 13th, and New Delhi in 14th place, it said.

As industrial tenants feel the squeeze here, it spells good news for industrial real estate investment trusts - which own rented industrial space - such as Ascendas Reit, as well as property companies with industrial exposure such as Soilbuild Group Holdings.

Soilbuild last week launched its terrace food factories at Senoko Crescent for sale and lease.

Worldwide, London remains the most expensive industrial location, followed by Rishon LeZion near Tel Aviv in Israel.

Singapore's gross rents for prime industrial space rose about 20 per cent last year to around $1.25 per sq ft per month on average, said Cushman & Wakefield.

Its director of commercial and industrial transaction services for Singapore, Mr Alvin Teo, said the rise is in line with the rising trend in the overall property market as rents and capital values in all property sectors have edged up on the back of an improved economy.

'The strong performance in the manufacturing sector as well as the spillover pressure from a very tight office market contributed to lower vacancy rates and an increase in occupancy costs for industrial space.'

Indeed, as office rents rise, more firms are shifting backroom operations from prime locations to other areas, including industrial spots.

The Government's ongoing efforts to attract investments through strategies such as better tax incentives and creating industry cluster strategies, have led to rising demand for industrial and business space, said Mr Teo.

However, controlled supply and about 33 million sq ft of space planned for the next five years will keep industrial rents rising at only a moderate pace, he added.

This year, gross rents could rise by 10 to 15 per cent, he said.

In the survey, which ranks 85 of the world's top industrial locations, New Delhi showed the biggest jump in rankings, rising 10 places up to the 14th spot.

India accounted for three of the world's top 10 locations for rental rises last year.

Globally, rents went up by an average of 6.5 per cent last year, up from a 1.9 per cent rise in 2005.

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The Republic's gross rents for prime industrial space rose about 20 per cent last year to around $1.25 per sq ft per month on average.