Cushman & Wakefield: Demand for Cold Chain Storage Booming

According to the UN Environment Programme, a staggering 14% of food worldwide is lost due to a lack of effective refrigeration – enough to feed a billion people.

Significant investment in cold chain infrastructure is clearly needed to save money and save the planet – and is becoming increasingly attractive, especially in countries like Singapore. 

Here, Brenda Ong, Executive Director – Logistics and Industrial at Cushman & Wakefield, lifts the lid on the factors driving this trend. 

Tell us a bit about yourself and your career

I'm Brenda Ong and I have more than 25 years of industrial real estate experience in delivering end-to-end solutions to clients across industry sectors and asset classes.  

My strong track record covers transaction management, landlord and tenant representation, investment sales, lease transactions and build-to-suit, as well as sale-and-leaseback arrangement. 

This wealth of experience in Singapore’s industrial real estate includes business parks, e-commerce logistics, infrastructure and data centres. As such, this strong reputation in the market makes my advice invaluable to both the media and clients. 

For those unfamiliar with Cushman & Wakefield (C&W), what are the company's main activities?  

Cushman & Wakefield is a full-service global commercial real estate company with more than 100 years of experience, 52,000 professionals and 400 offices worldwide.

Preferring the exhilarating challenge of complex problems over low-hanging fruits, our diverse teams bring their expertise and experience together to breathe life into viable solutions.   

Demand for cold chain storage, especially in Singapore, is booming. What are the primary factors driving this?  

There are a few factors driving the growth of cold chain storage. 

Firstly, the consumption of fresh food has been on the rise with Singapore’s growing population and their corresponding affluence.

This fresh food must be stored in specific conditions that only cold chain facilities can fulfil. Adding on to the demand for fresh food is the growth of e-commerce, a relatively new industry that bolsters the demand for fresh food since consumers can easily order fresh food and meals with a click of the mouse.  

Next, the growth of the biomedical industry in Singapore, though niche, has been growing, further contributing to the surge in demand for cold chain storage.  

What makes Singapore's cold chain market such an attractive long-term investment? 

Singapore’s cold chain market is underpinned by limited supply and steady long-term growth, making it an attractive long-term investment.

Furthermore, the cold chain market has higher barriers of entry given the capital expenditure required and limited suitable sites for cold chain. As such, rent and capital values are expected to grow over time. Between 2024 and 2030, Singapore’s cold chain market rents are anticipated to grow by 2-4% p.a. while capital value growth depends on land tenure.

Having said that, there are a few considerations for investors. With most industrial land under JTC’s management, investors must navigate and familiarise themselves with JTC’s rules and regulations. 

Additionally, most industrial land in Singapore is estimated to be on 30-year leasehold tenures or less. A short lease tenure may deter foreign institutional investors as the value of the land declines over time. Shorter tenure sites create complications for owners to undertake asset enhancement.

This is further compounded by heightened interest rates as development costs increase. Based on our experience, investor interest in industrial land with 20 years tenure or less tends to diminish as exit strategies become increasingly uncertain. 

Hence, while the cold chain market offers an attractive investment opportunity with growing rents and capital values, site selection is key and investors will need a clear leasing and risk mitigation strategy to succeed. 

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