Bookmark & Share
To boost the demand for industrial space in Singapore, CBRE said it is time to expand the list of potential occupiers to e-commerce start-ups and explore other possible ancillary uses for such properties.
In a report, CBRE said the manufacturing industry has emerged as a major driving force of the economy since Singapore’s independence, contributing about 20 percent of the gross domestic product (GDP). However, activity in the sector has slowed down in recent times due to external and internal headwinds.
In contrast, the city-state’s e-commerce industry is booming. Based Euromonitor International’s study last June, internet retail sales here increased by 12.5 percent year-on-year to S$1.08 billion in 2014, while online mobile sales surged by 53.9 percent to S$280.9 million.
Techlist also revealed that 80 percent of venture funds raised by internet firms are being pumped into the republic and their beneficiaries are mainly e-commerce firms like Lazada, Zalora and Reebonz.
“This is not surprising as Singapore is currently ranked 14th on the 2015 Global Retail E-commerce Index, indicating the strong fundamentals such as infrastructure and consumer behaviour which have established Singapore as the gateway for e-commerce,” noted CBRE.
So instead of only relying on external trade and the manufacturing sector to bolster the demand for the industrial property market, the authorities should also widen the list of potential occupiers to start-ups.
Another suggestion by the consultancy is to tweak the rules to include other forms of ancillary uses allowed in industrial estate.
Under URA guidelines, industrial properties are segregated for use by a 60:40 quantum, where 60 percent is predominantly used for core industrial activities, while the 40 percent is for ancillary uses.
In line with this, e-retailers can use 60 percent of the space to store their inventories, while the remaining “40 percent can be further proportioned to develop an all-encompassing pro-business environment with courier services, serviced offices, Wi-Fi-equipped cafes, and showrooms,” noted the consultancy.
“This creates a cost-friendly working environment as it promotes the growth of e-commerce by compressing e-retailers’ risks through reduction of overhead costs and lock-in periods. At the same time, e-commerce start-ups are able to benefit from the opportunity to boost their brand awareness at a lower cost.”
But to make this happen, ancillary uses should be expanded to included Wi-Fi-equipped cafes, courier offices, serviced offices and other facilities needed to transform industrial estates into a one-stop e-commerce hub for start-ups, the report said.
Currently, the permitted ancillary uses include industrial canteens, showrooms and other selected commercial uses such as clinics, banking hall/atm, minimart and fitness centres.
However, to get written permission, these selected commercial uses have to comply with some requirements. For instance, industrial canteens should not exceed 700 sqm or five percent of the total gross floor area (GFA), whichever is lower. Showrooms are only allowed to showcase products that are predominantly delivered and installed off-site and not transacted over the counter. The space for selected commercial uses like clinics, banking hall/atm, minimart and fitness centres should be only be located on the first floor and should not surpass 200 sqm or 10 percent of the GFA, whichever is lower.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg