APPD Market Report Article

Singapore

December 1, 2021

1.0%

SGD 4.0

Rents
Rising

City fringe business parks remain sought after

  • Firms from technology and biomedical-related sectors continue to drive business park demand in 3Q21, with a mix of expansion and consolidation requirements. Some were also looking to upgrade to better quality spaces.
  • Razer has moved into its new headquarter building in one-north in 3Q21. During the quarter, TUV SUD also officially opened its new premises in the International Business Park.

Upcoming projects continue to face construction challenges

  • Grab HQ building in one-north was completed by Ascendas REIT and handed over to Grab on 30 July 2021.
  • Full-year 2021 new supply is now envisaged to be lower than expected, as the completion of Surbana Jurong Campus in the CleanTech Park is expected to be delayed to 2022. This came as the recent resurgence in COVID-19 cases and supply chain disruptions continue to pose challenges for the construction industry which is grappling with a labour supply crunch and rising material costs.

Islandwide rent on track to meet 2021 growth forecast

  • Led by the higher rent expectations for better performing assets in city fringe locations, the average islandwide business park rent rose for the second consecutive quarter in 3Q21.
  • There were no known business park transactions in 3Q21. Although investors remain keen to pursue business park acquisition opportunities, there are limited available assets for sale. With yields holding relatively steady, this translated to modest capital value growth in 3Q21.

Outlook: Rent growth could gather pace in 2022

  • The government’s stance to manage COVID-19 as an endemic so as to minimise disruptions to economic activities should continue to bolster business confidence in the coming quarters. Coupled with the foreseen sustained demand from the biomedical and technology sectors, this should help to underpin business park rent growth over the same period.
  • Given the weight of capital pursuing industrial assets in a low interest rate environment, we maintain the view that there is potential for continued capital value appreciation, while yields could compress further going forward.

Note: Singapore Logistics & Industrial refers to Singapore's islandwide business park market.

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