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CT FoodNex, a freehold multi-user food facility located situated at Mandai Estate, opened for bookings in sales the 8th of May. The ramp-up factory, which is 10 stories high built by developer Chiu Teng Group has 109 industrial units that are strata-titled and a canteen. These industrial units B2 range from 1,700 to 2,928 square feet, and prices start at $2.5 million.
On May 8th, Chiu Teng collected 80 checks as expressions of interests (EOI). CT FoodNex was launched for sale on May 9. Within one week it was sold out to the 61 (56%) of the 109 units were purchased for an average of $1,545 per square foot According to developer. The sales indicate an average sixty% percent conversion.
Most buyers bought single units There were a few multi-unit buyers who bought a couple of units. One purchased an entire floor consisting of 12 units. Around 90% of buyers were Singaporeans while the remaining 10% included foreign buyers, claims Jerome Ng, director of business development at Chiu Teng Group.
According to Ng the buyers consisted of business owners and investors. “Most of these business owners are planning to run their businesses like a common kitchen” Ng adds. “This improves their efficiency in production and reduces their retail storefronts and the need for manpower.” Business owners also stand to benefit from joining an ecosystem that allows them to purchase products in bulk, thereby getting economies of scale Ng adds. Ng.
In addition to F&B companies that are setting the kitchens in a central location Another reason for the demand for food manufacturing units is the ghost or cloud kitchens that have become popular after Covid. “These ghost or cloud kitchens provide F&B owners the option to focus in food deliveries or leasing kiosks, instead of setting up a shopfront and paying for high cost retail rental,” says Ken Low who is the director of SRI who is advertising CT FoodNex with PropNex and ERA Realty Network.
With F&B operators still facing an influx of workers, Low expects demand for central kitchen or cloud kitchen operations to increase.
A market research report published by Mark-Ntel Advisors in March 2023 estimates that the market for cloud kitchens within Southeast Asia will grow at 13.2% CAGR from 2023 to 2028.
Based on SRI’s study the number of industrial units totalling more than 58,900 square metres (634,000 sq feet) and in unfinished strata-titled developments for sale in the 4th quarter of 2020. The majority of these are located in the North Region, and about 35% have at least 200 square meters (about 2,153 sq feet) of size says Low.
High-end specifications
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 with a price of $130 million. SRI was the broker for the transaction. The freehold 80,237 square feet plot is situated on Woodlands Road, providing easy access for large vehicles entering or leaving the property.
The building has the highest standards. The first level is comprised of eight units, with an average ceiling in the range of 7.475m up to 8.175m. Thus the units on the first floor have a mezzanine. The levels from second to fourth contain 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 in each. The ceiling for those on upper levels varies between 5.95m and up 7.525m.
First level are available to 40ft containers. 20ft containers are able to reach levels 4 and 5. The 5th to 10th levels are only accessible up to 14ft and 10ft trucks. “We offer different sizes and types that can be used by various users,” says Ng. CT FoodNex is targeted for its completion in 2H2025.
In contrast to residential developments, where ones on the top floors are most expensive for manufacturing units the lower the more affordable. Therefore, the most expensive flooring is the one at the bottom.
Nearby are two adjacent freehold industrial sites located at 12 and 10 Mandai Estate. These two sites were offered to be sold in October of last year and then purchased by small-scale 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 into a strata-titled multi-user food manufacturing facility for sale.
Mandai Estate — an ecosystem
In the past, Mandai Estate has transformed into a food-focused zone. SRI’s Low says this is due to its location close to the Agrifood Innovation Park.
As per 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 including agri-food technology; recycling and waste management metal; furniture and timber industries.
“Mandai Food zone lies 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 make up an entire ecosystem and produce savings in terms logistics.”
The location close in proximity to Woodlands Checkpoint, a 15-minute drive away, is a further attraction: It’s a good place to Malaysian people to get around. and also for those who have low-cost notes.
In the near future in the near future, it is expected that the 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 ease to residents and workers within the Sungei Kadut area,”” 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 rare to find Freehold Industrial property,” says Low. “And this location seems perfect.”
SRI also was the broker for selling the entire 12 unit floor located on the 8th floor in CT FoodNex. The buyer did not want to talk with SRI. The main reasons for the bulk purchase include it is a freehold property and the location of the property as well as belief in the potential for transformation of the Sungei Kadut Eco-District and the scarcity of industrial freehold sites in the near future. The buyer may use half of the units for his business and the rest to invest.
Low estimates for rental yields are expected to be within the 3 to 4% range. “For the freehold industrial property it’s about capital appreciation for the long run,” he adds.
Nearby on the 21st floor of Mandai Estate The nearby property at 21 Mandai Estate is the Food Vision at Mandai. The multi-user, 10-storey food facility is a joint-venture project by EL Development and Sim Lian Group. Food Vision @ Mandai was soft-launched in December last year and around 30% of the freehold industrial units are now in use. Based on caveats that were lodged up to date, the median cost of the units sold is $1,436 per sq ft.
Supply is catching up to demand
Alongside Mandai Estate as well, there is also a need for food manufacturing facilities located in industrial areas in Kim Chuan and Pandan, according to SRI’s Lye.
“We’re doing our due diligence on several other 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. This site is zoned as 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 to become a six-storey, multi-user food processing facility with a gross floor area of around 39,000 square feet.
“The strata-titled units are likely to attract food companies who prefer factories for food production located on the city fringes, since they are able to deliver their products to the city’s centre in a the shortest amount of time,” says Steven Tan who is the executive director for ERA investments and capital markets.
The most recent wave 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 primary considerations of investors typically revolve around rentals and future growth,” he adds.
In all across the board, industrial property rents and prices increased to their 10th consecutive quarterly high of 1Q2023 as per the JTC All Industrial indices. The index of rental prices was up 2.8% q-o-q, marking the most robust growth in the quarter since 3Q2013. The industrial price index also increased 1.5% q-o-q, slowing only a little 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 of non-oil products and the purchasing manager’s index, according to Colliers in its report on May 8.
The amount of industrial space that is new will exceed 10 million square feet per year in the coming three years in the estimation of Colliers. An additional 10.3 million square feet is anticipated to be available in the coming year. In addition, the year-round pipeline over the coming two years will be 10.9 million sq ft. This is substantially higher than the average annual total which was 8.4 million sq feet over the last three years.
“With supply 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 in industrial areas from the small 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 to accommodate SMEs,” he says. “After all 99% of the businesses that are located in Singapore have been identified as SMEs.”
Based on the Department of Statistics, Singapore’s total number of businesses grew from 273,100 in the year 2019 to 291,600 in 2021. Of the latter 99% are small- and medium-sized businesses.
Prior to CT FoodNex, Chiu Teng Group created CT FoodChain, a 10-storey multi-user factory that is strata-titled located at Pandan Loop, in the west. The property is leased for 99 years starting in 1984. Therefore it has 60 years remaining to lease. The development was launched in 2021 and all 99 units in the development have been sold.
Chiu Teng is a specialist in industrial and commercial space. Chiu Teng was the company that created the CT Hub the 11-storey multi-user industrial area that also houses retail on Kallang Avenue. The property was completed in 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 light industrial building that was ramped up and that was completed in 2012. Nearby, and also developed operated by Chiu Teng Group, is Tagore 8 which is a freehold light industrial building that has 128 units built in the year 2015.
