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This comes as the manufacturing and technology sectors, which will drive demand for such buildings, emerged at the top of Colliers’ ranking of Singapore’s seven core trade sectors in terms of resilience and rebound potential.
Investors in Singapore should focus on prime offices and industrial buildings, like hi-spec space and business parks, said Colliers International in its latest report.
This comes as the manufacturing and technology sectors, which will drive demand for such buildings, emerged at the top of Colliers’ ranking of Singapore’s seven core trade sectors in terms of resilience and rebound potential.
In ranking the sectors, Colliers Research considered three factors – namely GDP growth, stock index returns as well as earnings outlook.
Manufacturing topped the overall resilience and rebound ranking on strongest GDP rebound, while placing second highest in terms of stock index returns and future earnings growth.
Although the manufacturing sector is forecasted to contract in the near term due to labour shortages on the back of more stringent restrictions put in place during Covid-19, Colliers’ research showed that the sector is poised for a strong rebound as Singapore emerges from the circuit breaker measures and Covid-19 pandemic.
This bodes well for the industrial sector, said the report.
“The strong rebound of the manufacturing sector expected post-pandemic, together with increasing technology adoption, e-Commerce sales, delivery service needs, data broadband usage and other online activities, will directly benefit the sector across business parks, logistics spaces and data centres,” said Rick Thomas, Head of Occupier Services for Singapore at Colliers International.
The technology sector – which is expected to drive demand for prime office space, business parks and data centres – was listed second as it registered the second highest GDP growth, while posting the highest stock index returns as well as the strongest earnings outlook.
Colliers Research predicts rents for CBD Grade A office space to rebound 2.6% next year following a 5% drop this year.
“Given the advances in technology and the current trends allowing far greater flexibility across the working environment, fringe office and out of town (cost-effective business space) are likely to represent strong growth opportunity with a limited supply,” said Jerome Wright, Senior Director of Capital Markets and Investment Services for Singapore at Colliers International.
Meanwhile, Colliers pointed out that hotels and retail malls could also provide near term opportunities.
“Hospitality is one of the most-affected sectors currently. However, based on historical experience, we expect a rebound in tourist arrivals after the pandemic subsides, which bodes well for hotels and tourism-related businesses. In the longer term, the demand drivers for hospitality in Singapore remain resilient, including tight near-term supply and more tourist attractions,” it said in the report.
Historically, Singapore’s retail sector fared well due to rising consumerism and income growth.
“However, structural challenges have since evolved over the last few years and the sector continues to experience headwinds. As such, we believe the sector loses shine with a dim earnings growth outlook,” said Colliers.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg