New sources of demand for Singapore’s commercial real estate

Singapore’s strategic focus on key growth industries will continue to drive real estate demand

December 08, 2021

Singapore is benefitting as an emerging key investment destination during COVID-19. Despite global challenges, fixed-asset investment grew continuously since 3Q20 (except for 1Q21), according to the Economic Development Board. This growth has led to some new sources of demand for real estate.

Biomedical boom

The country’s status as an existing healthcare hub has driven new investments in cutting-edge healthcare capabilities, which the pandemic has accelerated.

Singapore has secured investment commitments from major biomedical companies, including BioNTech, Sanofi (~SGD 625 million) and Thermo Fisher Scientific (~SGD 175 million). These companies plan to set up manufacturing facilities in the country to meet a sharp rise in regional and global medical needs, consequently generating the demand for land and spaces in industrial zones.

Figure 1: Real estate demand from biomedical companies

Company Investment (SGD million) Description Demand impact on real estate
BioNTech Not disclosed
  • To open its office in 2021
  • First mRNA manufacturing facility in Singapore, with the capacity to provide regional and global supply; operational as early as 2023
  • Office/business park/ industrial space
  • Industrial-zoned land; factory
Sanofi ~625
(Euro 400)
  • New vaccine production site for Asia; expected to be operational in 2026
  • Industrial-zoned land; factory
Thermo Fisher Scientific ~175
(USD 130)
  • Sterile filling manufacturing plant for the Asia Pacific region; operational by 2022
  • Industrial-zoned land; factory
10x Genomics Not disclosed
  • Manufacturing facility, including reagent manufacturing; operational since late-2020
  • Solaris@ Kallang 164 Complex, occupying more than 53,000 sq ft of industrial space

Source: Company

Mobility industry: a new growth area

Consumers are gradually embracing electric vehicles due to better performance, increased affordability, global warming concerns and government incentives.

Hyundai Motor Group tapped into Singapore’s strength in advanced manufacturing, innovative ecosystems and its goal to have all vehicles run on cleaner energy by 2040. The firm committed SGD 400 million to build its innovation centre and a production facility. The facility in Jurong Innovation District – Singapore’s advanced manufacturing hub – will focus on future mobility research and development, including electric vehicle production.

This investment will pave the way for increased Korean supply chain investments, creating a new source of demand and potentially higher demand for real estate space.

Figure 2: Real estate demand from automotive firms

Company Investment (SGD million) Description Demand impact on real estate
Hyundai Motor Group 400
  • Innovation centre and production facility with an annual capacity of up to 30,000 cars; scheduled construction completion by end-2022
  • Approximately 474,000 sq ft of industrial-zoned land with approximately 935,000 sq ft of gross floor area (GFA) in Jurong Innovation District

Source: Company, JTC Corporation (JTC), The Straits Times

Riding on digital technology growth

The pandemic has accelerated the adoption of digital technologies. Many in-person activities – from telecommuting to distance learning, online shopping, entertainment/gaming and virtual physical activities – switched quickly and successfully to online delivery. 

Over the last two years, the Singapore office real estate market benefitted from the technology boom, driven by American and Chinese firms, including Alibaba, Amazon and TikTok.

Figure 3: Real estate demand from some technology firms

Company Building Estimated floor area (sq ft) absorbed by technology firms in 2020 and 2021* Demand impact on real estate
Alibaba Group/ Lazada
  • Lazada One
  • 140,000
  • Office
  • Asia Square Tower 1)
  • 100,000
  • Office
ByteDance / TikTok
  • One Raffles Quay (ORQ) South Tower
  • ORQ North Tower
  • Guoco Tower
  • 130,000
  • 19,000
  • 100,000
  • Office
  • Office
  • Office
Red Hat Asia Pacific
  • CapitaSpring
  • 60,000
  • Office
SEA Limited
  • Galaxis
  • Rochester Commons (coming soon)
  • 190,000
  • 200,000
  • Business Park
  • Office
Tencent / Riot Games
  • Marina One
  • 30 Raffles Place
  • Multiple workstations at JustCo facility
  • Multiple workstations at WeWork facility
  • Co-working facility in an office building
  • Co-working facility in an office building

Source: The Business Times, JLL

*Note: This need not represent the total floor space occupied by the company in the building to-date.

Tapping into semiconductor growth

As consumers stocked electronic products during the pandemic, there was a strong demand for chips from the electronics industry, leading to a global semiconductor chip shortage. In addition, capacity underinvestment from chip manufacturers and a demand recovery from the automobile industry aggravated this shortage. The semiconductor industry is now accelerating investments to ease chip shortages globally. 

Firms are capitalising on Singapore’s strength as a global node for advanced manufacturing and innovation. In June 2021, GlobalFoundries committed approximately SGD 5 billion to build an advanced semiconductor manufacturing facility in Singapore to ramp up existing capacity and strengthen customer supply chain reliance. Consequently, a large tract of industrial space at Woodlands Wafer Fab Park was absorbed.

Figure 4: Real estate demand from semiconductor manufacturers

Company Investment (SGD billion) Description Demand impact on real estate
GlobalFoundries ~ 5
(> USD 4)
  • Phase 1 will add 250,000 sq ft of clean-room space and new administrative offices; scheduled to be operational by 2023.
  • Industrial-zoned site with approximately 1 million sq ft of GFA at Woodlands Wafer Fab Park

Source: Company, JTC

The investment inflow from new and existing growth industries is a testament to the nation’s highly skilled labour pool, intellectual property rights protection, and positioning as a critical network for Asia and the world. A strategic focus on these growth areas will continue to drive real estate demand in Singapore.