Table of Contents
CT FoodNex, a freehold food factory in Mandai Estate preview sold about 56%. The ramp-up factory, built by Chiu Teng Group, contains 109 strata-titled industrial units and a cafeteria spread out across 10 stories. The base price for these B2 industrial spaces, which vary from 1,700 to 2,928 square feet, is $2.5 million.
At an average price of $1,545 psf, the developer claims that 61 of the 109 apartments were sold within a week. A 60% conversion rate may be seen in the numbers.
Many of the customers were only interested in a single unit, but a few purchased two or three, and one bought an entire floor’s worth (12 units). According to Chiu Teng Group’s head of business development, Singaporeans made up around 90% of purchases, while foreigners made up the remaining 10%.
Buyers included both investors and company owners, as reported by Ng. “Most of these business owners intend to operate their units as a central kitchen,” he continues. As a result, “their production efficiency has gone up while their need for retail space and employees has gone down.” Ng argues that if these company owners were integrated into a network, they might place bulk orders for materials and reap the benefits of economies of scale.
A growing trend since Covid is the use of “cloud” kitchens, both of which increase the need for food processing facilities. As Ken Low, managing partner of SRI, explains, “These cloud kitchens allow F&B operators of centralize food processing” CT FoodNex preview is being marketed in conjunction with PropNex and ERA Realty Network.
Low predicts that the demand for cloud kitchen or central kitchen operations will increase as F&B firms continue to suffer a labor crisis.
SRI found that as of 4Q2022, there were 263 available industrial units in unfinished strata-titled buildings, totaling 58,900 sq m (634,000 sq ft). Most of these apartments are located in the North Area, and 35% are at least 200 square meters (2,153 square feet) in size, as noted by Low.
About CT Foodnex Food Factory
The old BHL Factories in 2A and 2B Mandai Estate were bought by Chiu Teng for $130 million in July 2017 and are now being redeveloped into CT FoodNex. The contract was arranged by SRI. The 80,237 square foot freehold site has direct road frontage on Woodlands Road, making it convenient for large trucks to approach and leave the property.
The building is equipped with state-of-the-art features. There are eight units on the ground floor, and their ceiling heights range from 7.475m to 8.175m. Units on the ground floor feature a mezzanine because of this. On floors 2–4, there are 10 apartments each floor, whereas on floors 5–8, there are 12 apartments per floor. Both the ninth and tenth tiers have 10 units available. Apartments on higher levels have ceiling heights between 5.95 meters and 7.525 meters.
The first floor is reachable by 40 ft containers, while the fourth floor is within reach of 20 ft containers. Fifth through tenth floors are restricted to vehicles between 10 and 14 feet in length. “We have a variety of unit sizes and types to accommodate a wide range of customers,” explains Ng. The goal date for the conclusion of CT FoodNex is 2H2025.
When it comes to industrial spaces, the lower the better is often the case, in contrast to residential buildings where the upper floors get the greatest prices. Consequently, the first floor is the most sought-after location.
Collective Sales at 10 Mandai Estate
10 and 12 Mandai Estate are two adjacent freehold industrial properties close by. The two properties were put up for sale in October of last year, and in December, specialized developer Smartisan Development paid $100 million to buy them. Managing partner and co-founder of SRI Bruce Lye mediated the deal. Smartisan will likely transform the land into a for-sale multi-tenant food processing facility with strata titles.
In December of 2017, Smartisan paid $100 million to acquire 10 and 12 Mandai Estate industrial with the intention of transforming them into a freehold, multi-user food factory.
Ecosystem in the Mandai Estate
Mandai Estate has evolved into a foodie district throughout the years. Low of SRI said that this is because to the park’s proximity to the planned Agri-Food Innovation Park.
Multi-tenant projects with complementary industries are planned for the Agri-Food Innovation Park, according to JTC Corp. The new Sungei Kadut Eco-District has four areas dedicated to different sectors of the economy, including the agri-food technology sector, the waste management and recycling sector, the metal sector, and the wood and furniture sector.
According to SRI’s Low, the Mandai food zone is located in close proximity to the Sungei Kadut Eco-District, the Woodlands Regional Centre, and the Senoko Food Connection in Sembawang. “Eventually, they will all come together to form a complete ecosystem, which will result in logistical cost savings.”
Another perk is that the Woodlands Checkpoint can be reached in only 15 minutes by car. The travel time for employees in Malaysia is short, Bass tones.
Sungei Kadut MRT Station serving the Downtown and North-South Lines, is planned for the Sungei Kadut Eco-District in the near future. Low argues that an MRT station would be beneficial to the inhabitants and employees of the Sungei Kadut neighborhood.
The sale of all twelve units on the eighth level of CT FoodNex was mediated by SRI. The purchaser said he did not want an interview. The freehold tenure, location, faith in the Sungei Kadut Eco-District’s transition, and scarcity of future freehold industrial properties are all given as justifications for the massive acquisition. It’s possible that the buyer will put some of the units into investment and use the rest for his own company.
Low anticipates rental returns of 3-4%. It’s all about making money in the long run, he says, especially with freehold industrial property.
Rise in Industrial Property Supply
Food Vision @ Mandai is located not far away, at 21 Mandai Estate. EL Development and Sim Lian Group collaborated on the construction of a 10-story, multi-tenant food factory. Since its soft opening in December 2017, 30 of the 114 freehold industrial units at Food Vision at Mandai have been taken up. To yet, caveats indicate that units have sold for an average of $1,436 psf.
Lye of SRI observes that the industrial estates of Pandan and Kim Chuan also have need for food manufacturers in addition to Mandai Estate.
There are a few other locations where “due diligence” is being conducted, he adds. The demand for these kinds of sites has been phenomenal.
The building at 7 Kim Chuan Lane, which is being marketed by ERA, is a factory located near Tai Seng Industrial Estate. A freehold land of 15,761 square feet, the property is listed at a suggested price of $43 million. Business 2 (industrial) zoning and a plot ratio of 2.5 characterize the area. The land may be rebuilt into a six-story, multi-tenant food factory with a possible 39,000 square feet of gross floor space.
Steven Tan, managing director of ERA capital markets and investment sales, predicts that the food corporations that favor food factories situated on the city edge will be interested in the strata-titled apartments because of how quickly their goods can be delivered to the city center.
Lye of SRI explains that after the current wave of property cooling measures on April 27, investors started looking for alternatives. However, “rental demand and future growth” are the primary concerns of investors, he says.
For the tenth straight quarter, 1Q2023 saw increases in industrial property prices and rentals across the board, as measured by the JTC All Industrial indexes. This is the biggest quarterly gain for the rental index since the third quarter of 2013. Industrial price increases were 1.5% quarter-over-quarter, down from 1.7% in the preceding quarter.
Colliers reports on May 8 that manufacturing production, non-oil domestic exports, and the purchasing managers’ index have all continued to decrease.
Meanwhile, Colliers predicts that over the next three years, the supply of new industrial space will average more than 10 million square feet per year. The yearly supply over the last three years averaged 8.4 million square feet each year, but this year another 10.3 million square feet is projected to come online, and the annual pipeline for the following two years is 10.9 million square feet.
Designed with SMEs in Mind
But Chiu Teng’s Ng thinks SMEs, notably those in the food sector, would maintain a strong need for industrial space. We’re more concerned with providing adaptable office space for small and medium-sized businesses, he adds. “Most Singaporean businesses are small and medium sized,” the author argues.
The number of businesses in Singapore rose from 273,100 in 2019 to 291,600 in 2021, with 99% of them being small and medium-sized firms.
Prior to the construction of CT FoodNex, the Chiu Teng Group constructed the 10-story multi-user manufacturing building CT FoodChain in the western neighborhood of Pandan Loop. The 99-year lease on the land began in 1984. Therefore, the lease has a remaining term of 60 years. The whole 98-unit complex sold out shortly after its 2021 debut.
Chiu Teng was founded in 1999 and has since specialized in the design of commercial and industrial buildings. On Kallang Avenue, the company built CT Hub, an 11-story mixed-use industrial and retail complex. The building was ultimately finished in 2012. Located right next to CT Hub, the 2015-completed CT Hub 2 is a 10-story industrial-commercial complex with a strata title.
Meanwhile, in 2012, Chiu Teng finished construction on 9@Tagore, a four-story, ramp-up, light industrial building located on Tagore Lane. In 2015, Chiu Teng Group finished construction on Tagore 8, a freehold, light industrial building with 128 units.