Singapore’s GDP growth is expected to reach 6-7% in 2021 and return to pre-Covid levels. The country’s strong economic performance was underpinned by the manufacturing sector, which expanded 17.7% y-o-y in Q2 2021. Amid strong economic growth, the Singapore industrial market is on its recovery trajectory as according to the official statistics, overall industrial rents and prices continued to rise in Q2 2021 for the third consecutive quarter. Growth was underpinned by relatively healthy overall occupancy rates across the board.
Singapore industrial prices, rents and occupancy rates
As the broad industrial market recovers, let’s look at the prevailing market megatrends and opportunities in the Singapore industrial market.
Close-to-city logistics and food-related factories to see growth
The pandemic has accelerated significant shifts in consumer behaviour towards online shopping. Hence the adoption of e-commerce that will continue to stay and become the ‘new normal’. Average e-commerce adoption in Singapore as indicated by the proportion of online sales to total retail sales have more than doubled to 13.9% in 1H 2021 compared to 6.1% in 2019 pre-pandemic.
Additionally, the Food & Beverage (F&B) and groceries market has made strong inroads into e-commerce. Growth in the online F&B and groceries market was supported by powerful network effects caused by more consumers switching to online channels to order food and groceries, and more merchants going digital to mitigate lower retail footfalls amid remote working arrangements and safe distancing measures. While the roll-out of vaccines would facilitate the city-state’s reopening plan and may moderate online shopping activities, it is likely that the long-term behaviour of many consumers has been permanently altered.
Nonetheless, while the potential market has grown, competition for consumers is high and key e-commerce players will need to increase their differentiation to meet growing consumer expectations as the e-commerce arena heats up. Their playing field will evolve to q-commerce (quick-commerce), where delivery speed is key.