Landlords urged to inject assets into data centres in Singapore

This bright spot is expected to be robust amidst Singapore's Smart Nation dreams.

Amid the plummeting occupancy rates and weak demand, the industrial sector still has remaining tricks up on its sleeves as it sees new opportunities with the city-state’s Smart Nation initiative.

According to DBS Research, there is an apparent change in the needs for industrial space in the city-state, with the increasing demand for build-to-suit (BTS) facilities.

"We remain positive on the growth in demand for business parks and hi-tech industrial space, as specifications will remain attractive for users in the future," DBS noted.

The industrial sector could also see a new area of growth with the development of data-centres. As demand for data increases with Singapore's Smart Nation project, the report noted that it is best for landlords to venture into investing in this segment.

“Positioned as a regional HQ for manufacturers, we expect demand for Hi-tech and Business Parks space to remain stable leading to rental increases while demand for the light industrial and flatted factory space to remain under pressure, weighed down by ongoing consolidation trends amongst the manufacturers amidst rising business costs,” the report said.

Because of this, the industrial market is likely to be two-tiered, with rents in the Hi-Tech Industrial, Science Park, and Business Park converging towards office rent levels.

"On the other hand, rents in the convention factories, light industrial and warehouse is expected to remain under pressure due to ongoing consolidations," DBS explained.

For the warehouse space, new and emerging demand drivers from the fast-moving consumer goods, e-commerce players, and food & beverage industry would likely be the main target of these landlords.

“In the warehouse space, landlords can consider attracting demand by upgrading their warehouses in order to meet the changing demands of end-users,” DBS stated.