Chart of the Day: Rocketing occupancy costs threaten industrial players

It's already rising beyond 10.5%.

According to CIMB, industrial players stand out as losers. As land become increasingly scarce amidst rising population and housing needs, land optimisation will be increasingly critical.

Land previously used for industrial purposes would have to give way. "We expect Singapore to maintain its strategic shift towards higher value-added and more land-efficient economic activities," CIMB said.

Here's more from CIMB:

Traditional and more labour-intensive manufacturing activities could increasingly be squeezed out by higher operating costs and be compelled to seek lower-cost alternatives like Malaysia‟s Iskandar.

This emphasis on high value-added companies will also trigger scrutiny of industrialists‟ economic development contribution in the allocation of industrial sites.

This might impede industrial landlords‟ flexibility and speed in engaging prospective tenants during developments or lease renewals.

The Land Use Paper has, in fact, noted a potential need to recycle land such as older lower-intensity industrial areas to make way for housing or commercialuse s in the Land Use Plan.

Older centrally-located industrial estates may thus be unable to extend their land leases on expiry or may face compulsory acquisition by the government if there are more pressing land use needs.