A new report has picked Singapore's manufacturing sector to rebound the strongest out of all the country's core trade industries following COVID-19.

Colliers International's Resilience and Rebound Ranking report assesses seven sectors of the Singapore economy- manufacturing, financials, construction, professional services, hospitality, retail and technology based on GDP growth, stock index returns and earnings outlook.

Head of Research Tricia Song said investors should focus on prime offices and industrial buildings, such as hi-spec space and business parks, while hotels and retail malls could also provide near-term opportunities.

According to Colliers, occupiers should embrace technology and more flexible work strategies in the longer term.

Top Resilience and Rebound Ranking of Core Trade Sectors 

1. Manufacturing: Manufacturing ranks top in our overall resilience and rebound ranking, on strongest GDP rebound, as well as second highest stock index returns and earnings outlook.
2. Technology: Technology ranks second in our resilience and rebound ranking, driven by second highest GDP growth resilience, highest stock index returns and strongest earnings outlook.
3. Hospitality: Ranking third, Hospitality is among the most volatile sectors, having experienced significant effects during the crisis, with a strong rebound expected to follow. Looking ahead, earnings growth is expected to be strong, giving it a favorable tilt.

While the manufacturing sector is expected to contract in the near-term due to labour shortages amidst more stringent restrictions during COVID-19, research from Colliers International suggests a strong rebound in the sector as Singapore emerges from the pandemic and Circuit Breaker measures.

Colliers International Head of Occupiers Executive Director Rick Thomas said this boded well for the industrial sector.

“The strong rebound of the manufacturing sector expected post-pandemic, together with increasing technology adoption, e-Commerce sales, delivery service needs, data broadband usage and other online activities, will directly benefit the sector across business parks, logistics spaces and data centres.”

According to Colliers, the technology sector is likely to continue to be the main driver of office demand as it is expected to be the fastest-growing sector over the next three years based on earnings growth.

Capital Markets Senior Director Jerome Wright said CBD Grade A office rents were forecast to rebound 2.6 per cent in 2021 after a 5 per cent decline this year.

“Given the advances in technology and the current trends allowing far greater flexibility across the working environment, fringe office and out of town (cost-effective business space) are likely to represent strong growth opportunity with a limited supply," he said.

While the report identifies hospitality as one of the most-affected sectors currently, Colliers expects a rebound in tourist arrivals after the pandemic subsides, which bodes well for hotels and tourism-related businesses.

In the longer term, the firm believes demand drivers for hospitality in Singapore remain resilient, including tight near-term supply and more tourist attractions.

Click here to view the report.

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