Rajah & Tann Singapore LLP’s Benjamin Tay: Capital plays direct role in improving building quality, relevance

Beyond the usual narrative around demographics and online consumption (see Grab and Shopee), an equally important but less discussed factor is Asia’s role as a global manufacturing hub. Modern factories are increasingly automated, with sophisticated machinery and production lines generating and relying on vast amounts of data to operate efficiently.

Much of this computing benefits from proximity to data centres, making location a practical rather than theoretical consideration.

At the same time, in Asia, demand for data centres has begun to outstrip supply, largely due to constraints around power availability, grid reliability and land-use planning. As a result, the ability to secure power, navigate planning frameworks and execute at scale has become a key differentiator in determining where and how this infrastructure can be developed.

Having an active practice acting for tenants of office and industrial leases, how has tenant demand and leasing behaviour evolved in recent years?

For offices, the narrative is relatively clear. New lease cycles have given occupiers the opportunity to reassess how space is used, shifting toward more efficient layouts whilst ensuring sufficient provision for collaboration and client-facing functions.

There remains a pronounced flight to quality, which is hardly surprising. The widespread acceptance of the work-from-home mandate has fundamentally shifted the burden of justification onto the office itself: tenants must now ask what makes a physical workplace distinctive and compelling enough to warrant regular, if not full-time, attendance.

On a personal level, it has been refreshing to see previously drab offices reimagined as light-filled, active environments that encourage engagement and energy, whilst also delivering meaningful efficiencies.

In contrast, tenant behaviour in the industrial sector has become noticeably less sentimental and far more forensic. Demand continues to be driven by manufacturing-led foreign direct investment and ongoing supply chain realignment. As the data reflects, manufacturing and processing remain the primary recipients of foreign capital, with electronics, machinery and automotive components, and increasingly higher-value sectors such as semiconductors and technology-related manufacturing, leading demand. In Singapore, this builds on existing demand for built-to-suit facilities to support modern logistics and manufacturing requirements, particularly as supply chains were reconfigured during the Covid period.

More broadly across Southeast Asia, industrial supply has expanded rapidly. However, recent market data from Vietnam shows that whilst new industrial land, ready-built factories and warehouses have entered the market at pace, absorption has remained stable and rents have continued to edge upward, suggesting that demand is genuine but increasingly selective. Occupancy rates in prime, port-adjacent industrial parks remain high, often approaching or exceeding 80%, reflecting sustained demand for well-located, well-serviced assets. In Malaysia, built-to-suit developments continue to be a key driver, particularly in well-connected industrial corridors in Selangor and Johor, although the market is now beginning to absorb a visible pipeline of new supply. Indonesia tells a similar story: tenants are increasingly favouring standard factory buildings and ready-built warehouses that allow faster operational set-up and lower upfront risk. Developers, in turn, have responded by offering more modular and flexible formats rather than relying solely on pure land sales, especially within established industrial estates.

How do you see the growth trajectory of digital infrastructure assets in Asia, particularly within real estate over the next decade?

It is difficult to predict with precision, but my sense is that the binding constraint, and therefore the key driver of future growth, will increasingly be electricity supply, grid upgrades, and the politics of land and energy. Against that backdrop, this is likely to be a particularly active period for infrastructure and energy lawyers, as complex regulatory and policy questions around power generation, transmission and development will need to be resolved.

Ultimately, one would expect well-functioning governments to support the healthy growth of digital infrastructure by unlocking grid capacity and enabling investment, rather than constraining growth through structural bottlenecks and regulatory restraints. Against this backdrop, we expect ESG considerations and regulation to become more practical and less rhetorical, with a clearer emphasis on execution and the deployment of proven, best-in-class technologies, rather than aspirational (but cost ineffective) solutions. Viewed through that lens, it would not be surprising over time to see nuclear energy begin to establish a more credible and serious footing in parts of ASEAN.

What policy shifts do you anticipate could significantly influence commercial or industrial property investment in Asia, and how should investors adapt?

For most real estate investors, assuming comparable returns, investing should ideally be as boring as possible. In Asia, policy risk has long been a recurring consideration, but it is better understood not as a single, uniform concern, rather as a series of localised, and, regardless of which government is in office, often manageable, variables that play out differently across markets and asset classes.

Where risks do arise, they tend to stem from issues of policy execution, regulatory consistency, or shifts in domestic priorities, rather than any fundamental hostility towards real estate capital. Changes in government, decentralised decision-making, and evolving approaches to land use, energy policy and industrial planning can introduce friction or delay, particularly for long-dated real estate assets where certainty of zoning, power availability and planning approvals is critical.
In our view, these risks are generally navigable for real estate investors who partner locally, understand market-specific nuances, underwrite conservatively, and focus on jurisdictions with clear institutional capacity and a demonstrated commitment to economic growth and capital formation.

Across ASEAN more broadly, we do not see a meaningful retreat from foreign direct investment into real assets. The region’s demographics, urbanisation needs and infrastructure deficits make foreign capital a necessity rather than a choice. What is changing is not openness, but expectations: governments are becoming clearer about the type of real estate investment they wish to attract, longer-term, operationally committed capital that supports employment, industrial development and sustainability objectives.

That said, political risk has not disappeared, and Malaysia is a useful illustration. Under the current leadership, it remains quietly pro-FDI, particularly in industrial, logistics, data centres and advanced manufacturing real estate. It has great recent success and its appeal, like in Singapore, lies in relative policy continuity, ongoing modernisation, predictable institutions and a pragmatic approach to foreign capital. However, Malaysia also serves as a reminder that changes in government can, at times, alter the policy and regulatory landscape quite dramatically. For investors, this reinforces the importance of structuring for resilience, maintaining flexibility, and underwriting with an appreciation of political as well as market cycles.

As a returning judge at the Real Estate Asia Awards 2026, how would you assess the preparedness of this year’s nominees in terms of adaptability to market movements?

Unlike other years where innovation itself may have taken centre stage, this year I think we are looking for nominees who also demonstrate a clear long-term view, grounded in energy and sustainability realism, and supported by genuine operational agility. In plain terms, we are looking for organisations that can retain their core identity and uniqueness, but able to pivot effectively without panicking, and to invest decisively without chasing narratives or succumbing to AI-fuelled hallucinations.