Industrial property and structural change of manufacturing: A relative-cost analysis

Abstract

Structural change in manufacturing is gaining momentum in many developed as well as developing cities due to an emerging phenomenon of international division of production. As an advanced developing city-state, Singapore has had the same experience. Labor cost has been an obvious major factor responsible for the structural change in manufacturing since the 1970s. However, having seen that industrial property as a vital factor in manufacturing production is neglected in research, this paper explores the role of the industrial property market in the process of structural change in Singapore's manufacturing sector. On a background of land scarcity and rapid growth, it is found that Singapore industrialists must invest more in premises than previously. There are indications that changing industrial property prices have affected manufacturing groupings unevenly and thus led to structural changes in the use of industrial properties. Space has been transferred from less competitive sectors to more competitive ones due to comparative advantages in its utilization enjoyed by efficient sectors. Therefore, the general trend of rising land costs has contributed, to a certain extent, to the restructuring of Singapore's manufacturing sector.