On December 4, VisionPower Semiconductor Manufacturing Company (VSMC) commenced construction on a new $7.8 billion wafer manufacturing facility in Tampines. The plant, set to begin initial production in 2027 and expected to produce 55,000 wafers per month by 2029, will create about 1,500 jobs. VSMC is a joint venture between Taiwan’s Vanguard International Semiconductor Corporation and the Netherlands’ NXP Semiconductors, with a 60:40 ownership ratio.
When contemplating an investment in a Singapore Condo, it is crucial to evaluate the potential rental yield. Rental yield refers to the yearly rental income as a percentage of the property’s purchase price. This metric can vary significantly for condos in Singapore, based on factors such as location, property condition, and market demand. High rental demand areas, like those near business districts or educational institutions, typically offer more attractive rental yields. To gain a better understanding of a specific condo’s rental potential, conducting thorough market research and seeking guidance from real estate agents can be highly beneficial. Stakeholders can visit Singapore Condo for further insights.
This investment is in line with the growing trend of expansion in the semiconductor industry. In March, Japan’s Toppan Holdings also began construction on a factory in Jurong Lake District that will produce semiconductor packaging materials. The estimated cost of the project is $450 million.
According to Leonard Tay, head of research at Knight Frank Singapore, VSMC and Toppan are just a few examples of chipmakers and other related businesses that are setting up new production plants and R&D campuses in Singapore. This is to boost their supply chain resilience, as Singapore remains a global production hub for semiconductors and chips due to its stability amid ongoing geopolitical tensions in other parts of the world.
This expansion is taking place as the global semiconductor industry bounces back from a downturn in 2023 brought on by softer demand and higher supply. Research by London-based consultancy Omdia shows that the industry recorded a 26% year-on-year jump in revenue for the first three quarters of 2024, a reversal from the previous year when revenue fell by 9% to US$544.8 billion for the whole of 2023.
The rebound in the semiconductor industry has given a boost to Singapore’s manufacturing sector. After a sluggish first half of the year with two consecutive quarters of contractions, manufacturing output expanded by 11% year-on-year in the third quarter of 2024. This was led by the electronics cluster, fueled by strong demand for smartphone and PC semiconductor chips, according to data from the Ministry of Trade and Industry.
However, Singapore’s industrial property rents, which had been on an upward trend for 16 consecutive quarters, slowed down in 3Q2024. This was due to a more cautious sentiment among occupiers amid an uncertain macroeconomic environment, according to Catherine He, Colliers’ head of research for Singapore. Tricia Song, head of research for Singapore and Southeast Asia at CBRE, also points out that consolidation in the third-party logistics and e-commerce space has contributed to growing occupier resistance.
Not all industrial segments were equally affected, however. The multiple-user factory and warehouse segments remained relatively resilient throughout the year, registering rental growth across the first three quarters supported by stable occupancy rates. In contrast, the single-user factory segment saw softer demand, resulting in both rents and occupancy slipping by 0.3% quarter-on-quarter in 3Q2024, marking the first rental decline since 3Q2020.
Industrial property sales, on the other hand, were more lively. Following a quiet start to the year, activity picked up in 2Q2024, with several sizeable transactions taking place. These include the sales of BHL Factories at 2C Mandai Estate for $74 million in May, Kian Ann Building at 7 Changi South Lane for $63 million in June, and a single-user factory at 47 Pandan Road for $36 million in April.
This activity resulted in a sevenfold jump in industrial property sales to $2.45 billion in 3Q2024, according to Alan Cheong, executive director of research and consultancy at Savills Singapore. As a result, Cheong expects that there will likely be a slowdown in big-ticket industrial deals, with each deal likely to be significantly lower than $1 billion in 2025.
According to JTC, 0.2 million sqm of new industrial space is expected to be completed in 4Q2024, with a further 1.6 million sqm of space targeted for completion in 2025, nearly double the average annual new supply of 0.9 million sqm over the past three years. The incoming supply, coupled with weaker demand, means that rental and price growth will likely further narrow in the near term.
Despite this, demand remains healthy for multiple-user factory space, centrally located food factories, and favoured locations for logistics space, as stated by Savills’ Cheong. In addition, the electronics and advanced manufacturing sectors are expected to continue performing well and attracting investments, with data centres being an important pillar for the industrial sector.
Singapore’s industrial property market is likely to remain stable, with some opportunities emerging amid an evolving leasing landscape, given the ongoing demand for industrial space.