Singapore among top locations for industrial occupiers seeking to nearshore: Savills
/ EdgeProp Singapore |
Singapore’s high ranking in the index was supported by its efficient port services, supporting logistics and transparent business costs. (Picture: Samuel Isaac Chua/The Edge Singapore)
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According to research by Savills, Singapore is the sixth-highest-ranking destination globally for industrial occupiers looking to nearshore. Nearshoring is when manufacturers move production to a nearby country to serve their main market better. It contrasts with offshoring, where production is moved to a distant country to cut costs.
Singapore came in sixth on Savills’ latest Nearshoring Index, which ranks 26 countries based on factors that may be important to occupiers looking for new locations to shorten or diversify their supply chains. This includes the countries’ resilience, economic cost, business environment and environmental, social and governance (ESG) performance.
Portugal topped the list, leading a group of European countries that dominated the top spots, including the Czech Republic, Poland and Sweden. Japan ranked fifth overall, edging over Singapore as the top destination in the Asia Pacific (Apac) region.
Savills Nearshoring Index 2024 rankings
Source: Savills
While the last several decades saw a wave in offshoring driven by occupiers seeking to cut costs, the impact of supply shocks and an increased focus on ESG have driven the emergence of nearshoring, says Charlotte Rushton, an analyst for Savills World Research.
Still, budgets remain a major driving force. “Manufacturing trends appear to show that although companies are setting up in new locations, they’re still prioritising reducing costs, therefore favouring locations such as Mexico and Vietnam,” Rushton adds.
Countries that scored highly on Savills’ Nearshoring Index offered low costs while balancing other factors. Ruhston adds that preferences differed according to specific industries. For example, occupiers within the semiconductor, electric vehicle and energy industries, which are more sensitive to geopolitics and trade policy, prioritised locations such as Sweden, the UK and the US, which offer higher-skilled and higher-valued production.
Alan Cheong, executive director for research and consultancy at Savills Singapore, says that Singapore’s high ranking in the index was supported by its efficient port services, supporting logistics and transparent business costs.
He adds: “With continued geopolitical uncertainties impacting global economic supply chains, Singapore’s advantage of being geographically positioned at the crossroads of major shipping routes will also put it in good stead to maintain her high rankings in the foreseeable future.”
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