CT FoodNex, a freehold multi-user food facility located located at Mandai Estate, began accepting sales reservations the 8th of May. The 10 storey ramp-up facility built by developer Chiu Teng Group has 109 industrial units that are strata-titled and a canteen. The B2 industrial units vary from 1,700 to 2,928 square feet, and prices start at $2.5 million.
J’Den architect following the successful $340 million acquisition of the former JCube Mall by CapitaLand, Singapore’s leading property developer, this new residential development offers residents unparalleled convenience.
On May 8th, Chiu Teng collected 80 checks as expressions of interests (EOI). CT FoodNex was launched for sale on May 9. Within the first week it was sold out to the 61 (56%) of the 109 units sold with an average cost of $1,545 per square foot according to developer. The sales are based on the 60% per cent conversion.
Most buyers bought single units Some were multi-unit buyers who bought a couple of units. One even purchased the entire floor of 12 units. Around 90% of buyers were Singaporeans and the remaining 10% included foreign buyers, claims Jerome Ng, director of business development at Chiu Teng Group.
According to Ng the buyers comprised a mix of business owners and investors. “Most of these business owners are planning to run their businesses in a kitchen centrally” Ng adds. “This enhances their productivity as well as reducing the size of their retail stores and manpower requirements at the same time.” Business owners can also benefit from joining an ecosystem in which they can buy items in bulk, thus benefiting from economies of scale, Ng adds. Ng.
In addition to F&B companies that are setting their kitchens in central locations Another reason for the demand for food factories is the ghost or cloud kitchens that have become popular in the last few years, following Covid. “These ghost or cloud kitchens offer F&B operators the choice to focus in food deliveries or leasing kiosks, instead of setting the space of a storefront and paying hefty prices for retail,” says Ken Low the director of SRI who is selling CT FoodNex with PropNex and ERA Realty Network.
With F&B operators still facing labor shortages, Low expects demand for cloud kitchens or central kitchen operations to grow.
A market research report published by Mark-Ntel Advisors in March 2023 predicts that the market for cloud kitchens across Southeast Asia will grow at 13.2% CAGR from 2023 to 2028.
According to research conducted by SRI the number of industrial units totalling the equivalent of 58,900 square meters (634,000 sq feet) that were in strata-titled developments for sale in the 4th quarter of 2020. A majority of these units are located in the North Region, and about 35% have at least 200 square meters (about 2,153 sq feet) of size says Low.
CT FoodNex is a redevelopment of the previously owned BHL Factories at 2A and 2B Mandai Estate that Chiu Teng purchased in July of this year at $130million. SRI was the broker for the transaction. The freehold parcel is located on Woodlands Road, providing easy access for large vehicles entering or leaving the property.
The building is built to top-quality specifications. The first level is comprised of eight units that have the ceiling in the range of 7.475m from 8.175m. Therefore the units on the first floor have a mezzanine. The fourth and second levels have 10-units per floor while the fifth and eighth levels are home to 12 units each floor. The 9th and 10th levels each have 10 units per level. The ceiling height of higher floors varies between 5.95m up to 7.525m.
This level can be available to containers up to 40 feet, while 20ft containers are able to reach levels 4 and 5. The 5th to 10th levels are only accessible for trucks between 10ft and 14ft. “We have different sizes and types that can be used by different types of users,” says Ng. CT FoodNex is targeted for its completion in 2H2025.
Contrary to residential developments where ones on the top floors are most expensive in factories, the less the more affordable. Thus, the most costly flooring is the one at the bottom.
Nearby are two adjacent freehold industrial sites located at 12 and 10 Mandai Estate. Both sites were put up for sale in October last year, and were purchased by the niche developer Smartisan Development for $100 million in December. Bruce Lye, co-founder and managing partner of SRI has arranged the deal. Smartisan is expected to revamp the site to become a strata-titled multi-user food manufacturing facility for sale.
Mandai Estate — an ecosystem
In the past, Mandai Estate has transformed into a food and beverage zone. SRI’s Low says this is due to its location close to the Agrifood Innovation Park.
Based on JTC Corp, Agri-Food Innovation Park will be a multi-tenanted development that will have synergistic business. The Agri Food Innovation Park is part of the Sungei Kadut Eco-District that includes four precincts that include agri-food technology, recycling and waste management metal; furniture and timber industries.
“Mandai the food area is close to the Sungei-Kadut Eco-District Woodlands Regional Centre and the Senoko Food Connection in Sembawang,” according to SRI’s Low. “Eventually they’ll create an ecosystem that will produce savings in terms logistics.”
The location close of the Woodlands Checkpoint, a 15-minute drive away, is a further attraction: It’s a good place and convenient for Malaysian people to get around. and also for those who have low-cost notes.
In the near future it is expected that in the near future, Sungei Kadut Eco-District will have an upgraded MRT station called The Sungei Kadut MRT Interchange Station for the Downtown and North-South Lines. “Having the possibility of having an MRT station will provide added convenience for residents and workers within the Sungei Kadut region,” Low says. Low.
Low bought a unit from CT FoodNex for investment. His co-worker, Lye, purchased two units as well, both to invest. “It’s uncommon to find a property that is freehold for industrial property,” says Low. “And this location seems great.”
SRI also helped broker sales of an whole floor of 12 units located on the 8th floor in CT FoodNex. The buyer did not want to speak with the broker. The main reasons for the bulk purchase include it is a freehold property as well as the position of the property as well as belief in the potential for transformation of the Sungei-Kadut Eco-District and the fact that there is a limited supply of industrial freehold sites in the near future. The buyer may use one-third of the units to run his business activities and the rest to invest in.
Low estimates of rental yields for be within the 3 to 4% range. “For Freehold Industrial property it’s all about capital appreciation over the long term,” he adds.
Nearby on the 21st floor of Mandai Estate The nearby property at 21 Mandai Estate is food Vision located at Mandai. The 10 storey, multi-user food manufacturing facility is a joint venture project of EL Development and Sim Lian Group. Food Vision @ Mandai was soft-launched in December last year and approximately 30% of the 114 industrial units that are freehold are now in use. Based on caveats that were lodged until date, the average cost of the units sold is $1,436 per sq ft.
Supply keeping pace with demand
Alongside Mandai Estate as well, there is also a need for food manufacturing facilities within the estates for industrial production that are Kim Chuan and Pandan, says SRI’s Lye.
“We’re conducting due diligence on two more sites,” he says. “Interest in these sites has been unstoppable.”
Close to Tai Seng Industrial Estate, ERA is marketing the factory building located situated at seven Kim Chuan Lane. The property is located on a 15,761 square foot freehold site with a price guide at $43 million. It is a site is zoned for business 2. (industrial) with an area ratio of 2.5. The site has been given a provisional permit to allow this site to be developed into a six-storey multi-user food processing facility with a gross floor space of approximately 39,000 square feet.
“The strata-titled units are likely to be attractive to food businesses that prefer factories for food production located on the city’s fringe, since they are able to deliver their products to the city’s centre in a an extremely short period of time,” says Steven Tan the executive director for ERA Capital Markets and Investment Sales.
The most recent cycle of property cooling measures that took effect on April 27 has caused investors to think about alternatives to investing, according to SRI’s Lye. “However the main considerations for investors typically revolve around rent demand and growth in the future,” he adds.
All over the board Industrial property rents and prices climbed in the 10th straight quarter in the 1Q2023 according to the JTC All Industrial indices. The index of rental prices was up 2.8% q-o-q, marking the highest growth rate since 3Q2013. In addition, industrial prices increased 1.5% q-o-q, slowing somewhat by comparison with previous 1.7% q-o-q growth in the prior quarter.
The indicators for trade remain in the soft side, despite continual contractions being recorded in the manufacturing output, exports to the domestic market that are not oil-based and the purchasing managers’ index, according to Colliers in its report on May 8.
Meanwhile, the availability of new industrial space is expected to be greater than 10 million square feet per year in the coming three years in the estimation of Colliers. A further 10.3 million square feet are scheduled to be completed this year. The total pipeline of the coming two years will be 10.9 million square feet, significantly higher than the annual total which was 8.4 million sq ft in the last three years.
“With the market catching up tenants might have more choices and relief as rents and prices decrease,” comments Michael Bowens director of industrial, Asia at Colliers.
Catering to SME
Chiu Teng’s Ng believes that the demand of industrial spaces from smaller and medium-sized companies (SMEs) particularly those working in the food industry and food processing, will remain strong. “We’re focussed on establishing flexible areas that are suitable for SMEs,” he says. “After all 99% of the businesses that are located in Singapore comprise SMEs.”
As per the Department of Statistics, Singapore’s total number of companies grew from 273,100 in 2019 up to 291,600 in 2021. Of 100% are small and medium-sized enterprises.
Prior to CT FoodNex, Chiu Teng Group created CT FoodChain, a 10-storey multi-user factory that is strata-titled in Pandan Loop, in the west. The property is leased for 99 years beginning in 1984. Thus it has 60 years remaining to lease. In 2021, the first the 98 units of the development have been sold.
Chiu Teng specializes in industrial and commercial spaces. Chiu Teng is the group that developed the CT Hub the 11-storey multi-user industrial area that also houses retail on Kallang Avenue. The property was completed in the year 2012. CT Hub 2, a strata-titled 10-storey, industrial-commercial property adjacent to CT Hub, was completed in 2015.
At Tagore Lane which is located just off Upper Thomson Road, Chiu Teng has developed 9@Tagore 4@Tagore, a four-storey construction that is ramped-up and light industrial which was completed in the year 2012. The next door, which is also owned operated by Chiu Teng Group, is Tagore 8 which is a freehold light industrial structure with 128 units that were completed in 2015.