Singapore Among Top Locations Industrial Occupiers Seeking Nearshore Savills
in Singapore
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Singapore is a top choice for industrial occupiers looking to nearshore, according to a recent study by Savills. The Nearshoring Index, which ranks 26 countries based on factors relevant to occupiers, placed Singapore as the sixth-highest-ranking destination globally.
Nearshoring is the practice of moving production to a nearby country in order to better serve the main market. It is the opposite of offshoring, where production is moved to a distant country in order to cut costs.
Portugal was ranked first on Savills’ Nearshoring Index, followed by a group of European countries including the Czech Republic, Poland, and Sweden. Japan came in fifth, just above Singapore, as the top destination in the Asia Pacific (Apac) region.
According to Charlotte Rushton, an analyst for Savills World Research, the emergence of nearshoring is driven by the impact of supply shocks and an increased focus on environmental, social and governance (ESG) factors, rather than just cost-cutting measures.
However, cost remains a major factor for many manufacturers. Rushton notes that while companies are expanding into new locations, they are still prioritizing cost reduction, making countries like Mexico and Vietnam popular choices.
The countries that ranked highest on the Nearshoring Index were those that offered low costs while balancing other important factors. Different industries also have different preferences, with those in the semiconductor, electric vehicle, and energy sectors showing a higher sensitivity to geopolitical and trade policies. These occupiers tend to favor locations like Sweden, the UK, and the US, where the production is higher-skilled and higher-valued.
In Singapore, Alan Cheong, executive director for research and consultancy at Savills Singapore, attributes the country’s high ranking to its efficient port services, strong logistics support, and transparent business costs.
He adds that Singapore’s strategic geographical position at the crossroads of major shipping routes is also an advantage, especially in the face of ongoing geopolitical uncertainties impacting global economic supply chains. This places Singapore in a favorable position to maintain its high ranking in the Nearshoring Index in the near future.