APPD Market Report Article


February 28, 2022


SGD 4.04


Demand for city fringe business parks holds firm in 4Q21

  • Leasing activity remained largely driven by requirements from the technology and biomedical sectors and geared towards more centrally located business park premises in 4Q21.
  • We understand Grab moved into its new campus building in one-north, while Razer officially opened its new premises in 4Q21 after moving in a quarter earlier.

Lower than expected completions in 2021

  • There were no known new completions in 4Q21 as the second phase completion of JTC CleanTech Three has been deferred to 2022. The development was partially completed in 3Q21.
  • In light of the above, full-year net new supply ended 2021 lower than envisaged.

Third consecutive quarterly rise in rent

  • The average islandwide business park rent stayed on the uptrend in 4Q21. This was again lifted by the higher rent expectations of better performing assets in city fringe locations vis-à-vis those in the outlying areas.
  • There was one business park transaction in 4Q21. This involved the sale of 1 Science Park Drive by Ascendas REIT to a 66:34 joint venture between CapitaLand Development and Ascendas REIT for about SGD 103 million. The joint venture entity will redevelop the site into a life science and innovation campus focusing on new economy sectors such as biomedical sciences, digital and technology.

Outlook: Further rent and capital value upside foreseen

  • We expect demand for business park premises, especially those in city fringe locations, to stay healthy. Amid a foreseen tightening in space availability for city fringe premises, rent growth could accelerate in 2022.
  • There is potential for further capital value appreciation as industrial assets are expected to remain a sought-after investment asset class in 2022. As buying opportunities for business park properties are expected to stay limited, yields could continue compressing in 2022.

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

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