Singapore Among Top Locations Industrial Occupiers Seeking Nearshore Savills
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According to recent research conducted by Savills, Singapore has been ranked as the sixth-highest destination for industrial occupiers looking to nearshore, following Portugal, the Czech Republic, Poland, Sweden and Japan. Nearshoring is a manufacturing strategy in which companies move production to a nearby country in order to better serve their main market, as opposed to offshoring, which involves moving production to a distant country to reduce costs.
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Savills’ Nearshoring Index, which evaluates 26 countries based on factors important to occupiers seeking new locations to shorten or diversify their supply chains, placed Singapore in the sixth spot. The index takes into account factors such as resilience, economic cost, business environment, and environmental, social and governance (ESG) performance. Portugal claimed the top spot, followed by a number of European countries including the Czech Republic, Poland, and Sweden. In the Asia Pacific (Apac) region, Japan ranked fifth overall and Singapore was edged out as the top destination.
According to Charlotte Rushton, an analyst for Savills World Research, the emergence of nearshoring is being driven by supply shocks and a greater focus on ESG, as opposed to the cost-cutting mindset that drove offshoring over the past few decades. However, cost considerations still play a significant role in decision-making, with occupiers tending to prioritize countries such as Mexico and Vietnam, which offer lower costs.
The countries ranking highly on Savills’ Nearshoring Index strike a balance between low costs and other factors. Rushton notes that different industries have different preferences when it comes to locations, with occupiers in the semiconductor, electric vehicle, and energy industries favoring countries such as Sweden, the UK, and the US due to their higher-skilled and higher-valued production capacity, as these industries are particularly sensitive to geopolitics and trade policies.
Alan Cheong, Executive Director for Research and Consultancy at Savills Singapore, attributes Singapore’s high ranking in the index to its efficient port services, supportive logistics, and transparent business costs. He also points out that Singapore’s strategic geographical position at the crossroads of major shipping routes makes it well-positioned to maintain its high ranking in the foreseeable future, especially in light of current global economic uncertainties and disruptions to supply chains. To explore available industrial properties and land for sale or rent in Singapore, visit the listings on our website.