Industry Trends
Where vertical farms make sense: reading the global landscape
2026-04-29
The question of where to build a vertical farm always comes up at the very start of any business discussion.
In Japan, the conversation usually clusters around places with low electricity costs, sites near cities, or the reuse of closed schools and idle factories. That is valid as far as it goes. But when you look across the world, there are regions where vertical farms are chosen by a completely different logic.
Four axes for thinking about location
When you watch the global movement in vertical farming, you can explain why activity is happening in a given place through roughly four axes.
The efficiency axis: can the economics work? In regions with high labor costs, high land costs, and heavy logistics costs, automated vertical farms are more likely to make economic sense. This is the kind of decision that says, “We do not have to do it, but we make more money if we do.”
The survival axis: can food be secured without doing it? In regions where crops do not grow well in open fields, or where most food depends on imports, vertical farms are not a tool for efficiency. They are food security itself.
The policy axis: is there support from the state or local government? Subsidies, deregulation, land provision. In regions where government money is moving, even projects that would not stand on private capital alone can move forward.
The market axis: is there demand for high-value crops? High-income urban consumers, restaurants and hotels, demand for supplements and medicinal plants. In regions with a clear market, prices can hold at a level that covers high costs.
The most promising regions are the ones where multiple axes overlap. Saudi Arabia has “survival x policy.” Singapore has “survival x policy x market.” And Japan is fighting mainly on “efficiency x market.”
The Middle East: where survival x policy align in an extreme way
The Middle East is the most interesting region right now when you look at the logic of vertical farming.
Saudi Arabia falls below the threshold for absolute water scarcity, with less than 100 m3 of renewable freshwater per person per year. In 2024, the Arab region recorded its hottest year on record (Vertical Farm Daily, 2026). Under Vision 2030, hydroponics and vertical farming are built into national strategy. The Agricultural Development Fund invested about $220 million in high-efficiency greenhouses from 2021 to 2025, with a system that subsidizes up to 70% of capital investment. One of the largest automated vertical farms in MENA, located in Riyadh, reportedly produces 2,200 kg of leafy vegetables per day.
The UAE has a similar structure. About 90% of its food is imported, and the vertical farm “Greeneration” between Dubai and Abu Dhabi grows 70 varieties and supplies more than 350 restaurants and hotels.
The reason so much state money is flowing into vertical farming in the Middle East is that it is positioned not as an “efficiency tool” but as something closer to “the country does not function without this.”
I wrote more about this structure in another article, so read that alongside this one if you want to understand the background more clearly -> Why the Middle East is moving toward vertical farms: the structure of food security and oil dependence
Singapore: all the axes are there, but the on-the-ground reality is more difficult
Singapore is one of the rare places in the world where all four axes of vertical farm location are in place.
Its land area is small and open-field agriculture is barely viable (survival). More than 90% of its food is imported (survival). The government has set the “30 by 30” target, aiming to produce 30% of its food domestically by 2030 and backing that goal with subsidies (policy). It is also one of Southeast Asia’s high-income cities, with strong demand from dining and tourism (market). On paper, the conditions are hard to beat.
But the reality on the ground is far less smooth. As of 2023, eggs had reached a 35% self-sufficiency rate and exceeded the target, but vegetables remained at 3%. Many vertical farms depend on subsidies, and rising energy costs, rising labor costs, and tighter financing have already led to development delays and exits. The government is now considering a multi-tenant agri-food production facility that multiple operators can share (Eco-Business, 2026).
Singapore may be showing us a simple fact: “having the axes in place” and “actually making it work” are two different things.
Japan: how to compete on efficiency x market
Japan does not face the survival axis as sharply as the Middle East or Singapore. Its food self-sufficiency rate is low, but there is no broad sense across society that “we cannot eat without vertical farms.”
Instead, Japan has to compete on the efficiency axis, where high labor costs make automation attractive, and on the market axis, where there is demand for high-value crops and logistics access to urban areas.
But if you compete on the efficiency axis alone, the discussion easily turns into a numbers game on electricity costs, initial investment, and labor costs. That is exactly where many operators are struggling.
If you stop treating this as a discussion confined within Japan and start looking at technology exports or licensing into regions where the survival logic is stronger, the picture changes. That is one angle I am paying close attention to.
How to use this page
If you organize the global movement in vertical farming through these four axes, it becomes easier to see the strengths and weaknesses of the region where you are considering a vertical farming business.
- Which axis is actually working there?
- Do the axes overlap, or are you relying on only one?
- Who can fill the missing axis, and how: government, private companies, or partners?
If you keep these questions in mind, the discussion about location stops being just “where is electricity cheap?”