Factory and retail spaces shine as housing heads for worst market slump in 16 years

Its manufacturing and tourism rebound will spur demand for industrial and high-street shops.

- Noreen Jazul

Investors are buying industrial estates amidst a manufacturing revival in Singapore, analysts said, as new home sales in one of the world’s most expensive housing markets fall to the lowest this year since the 2008 global financial crisis.

Among industrial assets, logistics properties remain the most soughtafter, Chua Yang Liang, head of Research and Consultancy for Southeast Asia at Jones Lang LaSalle, Inc., told Singapore Business Review.

There is also renewed interest in the city-state’s retail sector, thanks to a global tourism revival and with more Asians getting rich, he added.

“Retail and logistics assets will continue to be in focus, with alternatives such as multi-family, data centres, and infrastructure drawing more attention from investors as well,” Chua said.

Industrial property deals rose 6.1% in the second quarter to $320m from a quarter earlier, according to Colliers International Group, Inc.

The property consultant expects the trend for this sector to continue, projecting a 10% increase in the fullyear volume to $2.7b.

Singapore's notable real estate deals this year include two from the industrial segment, such as BDx's buyout of OneTen Paya Lebar for $140m in March and Ho Bee Land's sale of a 49% stake in Elementum for $134m in August.

In the second quarter, BHL factories were sold for $74m and Kian Ann Building for $63m. There were also two separate sale and leaseback deals involving British American Tobacco and Singapore Asahi Chemical & Solder Industries for their factories, valued at $53.2m and $36m, respectively.

“More sales and leaseback deals are expected as companies look to free up capital, while investors look for higher-yielding assets,” Colliers said.

Apart from high yields, the industrial sector is particularly attracting investor interest as more businesses reconfigure their supply chains amid the US-China trade war.