Chart of the Day: Can data centres save Singapore’s struggling industrial property sector?

Logistics firms will also drive demand.

Industrial property rents and values in Singapore have been steadily declining over the past quarters, but analysts argue that strong occupier demand for data centre space will be able to keep the sector afloat in coming months.

“Interest in setting up data centres in Singapore remains healthy given its well-established infrastructure and strong connectivity. LinkedIn’s recent announcement that it is setting up a data centre spanning 23,500 sf in Jurong, its first data centre located outside US, is a strong indicator of the outlook for data centres,” said Brenda Ong, Executive Director, Industrial & Logistics Services, CBRE.

Apart from data centres, CBRE also expects to see strong demand for logistics space. Despite the strong supply pipeline situation in the logistics market, the fundamentals of the sector remain strong given Singapore’s standing as a global logistics hub.

“Logistics players at the same time have been trying to differentiate themselves by upgrading their capabilities to handle more specialised cargo such as pharmaceuticals and chemicals. This growing need for more specific requirements such as cold chain logistics and emergence of e-commerce will be the main growth sectors of industrial and logistics space,” Ong added.

Landlords who are able to maintain strong occupancies and improve their portfolio and operational efficiency will be primed to take advantage when the market turns.
Greater regional integration through the ASEAN Economic Community and Trans-Pacific Partnership will also be a boon for the logistics sector.