By Edith Tay, Executive Director and Founder of PropertyBank Pte Ltd
With concert events injecting millions of dollars into Singapore’s economy – particularly benefiting sectors such as F&B and hospitality – the country is currently eyeing “concert economics” as its new growth driver. Having hundreds of thousands of fans flocking to Singapore for Taylor Swift’s concerts, for example, businesses experienced a significant boost in revenue.
According to statistics from the Singapore Tourism Board (STB), there were 4,353,500 international visitor arrivals in the first three months of the year. This is a 50% increase from the same period last year and a 26% increase from the last quarter of 2023.
The F&B industry witnessed a surge in demand, especially following Chinese New Year, traditionally a period of slower business activity. However, this time, the situation was markedly different, with businesses experiencing a boom. Even three-star hotels saw a considerable increase in rates, with all available accommodations quickly booked out.
Concerts have a ripple effect on food factories
We now see this symbiotic relationship between the entertainment and the economy but what does this have to do with food factories? The connection runs deeper than what you are thinking. The demand generated by major events like Taylor Swift’s concerts has a ripple effect that impacts various sectors, including food factories.
Food factories play a crucial role in meeting the heightened demand for food and beverages during such events. They form the backbone of the food industry, supplying everything from hotel buffets to local delicacies like fishball noodles, snacks, beverages, meats, seafood, and even vegan products. Apart from that, Singaporean cuisine has also gained international recognition, with dishes like Hainanese chicken rice being enjoyed in cities worldwide.
In addition to serving local demand, Singapore’s food factories also contribute to global food sustainability efforts. They ensure a steady supply of local produce, particularly crucial in the wake of lessons learned from the Covid-19 pandemic. Investing in food factories has proven to be a lucrative venture, with capital values soaring over the years.
For businesses, owning a food factory can translate into substantial savings on rental costs. Over time, the appreciation in property value further enhances the investment’s profitability. Additionally, investing in food factories offers foreign investors an attractive alternative asset, free from Additional Buyer’s Stamp Duty (ABSD) and enjoying favorable tax conditions.
In a real-life example, a humble fishball noodle store in Singapore, gradually expanded their operations to encompass several stalls. Eventually, they made the strategic decision to purchase a food factory. What ensued was a remarkable trajectory of growth and financial gain.
At the time of their investment, the price per square foot for the food factory was below S$200. Fast forward 15 years, and the value had surged by over 200%. A rough glance at the transaction records from 2024 reveals that, had they chosen to cash out, they could have sold the property for more than S$600 per square foot.
Let’s delve into the financial implications further. By owning their food factory, our clients reaped significant savings on rental expenses. Conservatively estimating an average rental rate of S$2.50 per square foot over the years (though, in reality, it’s often higher, exceeding S$3 per square foot monthly), the accumulated savings for a modest 2,200 square foot unit would approximate S$990,000 – nearly S$1 million.
This highlights the importance of financial decision-making involved in investing in real-estate like food factories instead of a F&B business. For business operators, it presents an opportunity to secure long-term stability and financial growth.
Investing in food factories?
In light of this, it is undeniably a non-brainer decision to consider investing in food factories. For investors, the trend of escalating capital values over the years is well-documented. Whether you’re a seasoned investor or an eager explorer of new opportunities, investing in food factories presents a promising venture.
Imagine what’s worth the value and time: starting an F&B business from scratch or investing in a food factory. By opting for the latter, you bypass the operational headaches of daily management while capitalising on the upward trajectory of capital values. Rental income from tenants can effectively cover mortgage payments, offering a steady stream of revenue.
Food factories serve as an attractive alternative asset for foreign investors entering the Singaporean market. With no ABSD imposed and favorable tax conditions, investors can swiftly deploy their capital.
With exciting events like concerts by Ed Sheeran, Sir Rod Stewart, and Deep Purple, Singapore continues to be a dynamic hub for entertainment and investment opportunities when it comes to the real-estate market.
