By Jermaine Koh
If you’ve only got a minute:
- From light and heavy industrial spaces to food factories, business parks and warehouses, each type of industrial property serves different needs and attracts different kinds of investors.
- Rules on how these spaces can be used, such as usage limits and approvals from government agencies, also play a big role in shaping their investment potential.
- Industrial properties can offer stable demand and long leases, but success hinges on choosing the right type, tenant mix and compliance strategy.
When people think about property investment in Singapore, the first things that usually come to mind are residential apartments or commercial office spaces. But in recent years, industrial real estate has been gaining traction as a viable alternative. These properties underpin vital parts of the economy; from manufacturing and logistics to food production and research, and they present unique opportunities for investors as well.
The catch is that industrial property is not one-size-fits-all. Each type of industrial space serves different industries, comes with its own regulations and offers a distinct balance of risk and reward. For investors, understanding the differences is the first step to making a sound investment.
An overview of Industrial Property in Singapore
Industrial property is regulated by several government bodies that manage land use, development guidelines and environmental standards. Key regulators include:
- Urban Redevelopment Authority (URA): Manages land use planning and zoning for industrial developments.
- JTC Corporation (JTC): Oversees government land for industrial use and manages many industrial estates.
- Building and Construction Authority (BCA): Regulates building standards, structural safety and environmental sustainability in construction.
- National Environment Agency (NEA): Enforces rules related to pollution control, industrial waste and noise to minimise environmental and public health impact.
- Singapore Land Authority (SLA): Manages and regulates state-owned land, including its sale and leasing.
The government also categorises industrial land by use, ensuring activities such as logistics, R&D, food production and heavy industry (to name a few) are housed in suitable facilities.
For investors, this means understanding which segment best aligns with their goals and risk appetite.
The main types of Industrial Property
URA divides industrial sites into 2 zones – Business 1 (B1) and Business 2 (B2). Depending on the zone, uses may require pre-approval. For example, B1 zoning may require NEA clearance if there’s potential pollution.
Beyond these, there are also business parks, warehouses, food factories and specialised training or high-tech facilities, each tailored to a particular sector.
Specialised uses, such as food factories or industrial training centres may require additional clearances from agencies like NEA, PUB or MOM depending on their operations and environmental considerations.
Regulations also impose a “60:40 rule” – at least 60% of the property’s gross floor area (GFA) must be used for industrial purposes, while up to 40% can house supporting activities like offices or staff amenities.
Most industrial land is sold on leasehold terms, typically ranging 30-60 years. This shorter tenure has implications on financing, valuation and exit opportunities, making it an important factor for investors to consider.
Types of Industrial Property
Types | Purpose | Pros | Cons | Best Suited For |
|---|---|---|---|---|
Flatted Factories | Multi-storey industrial buildings divided into smaller units. They are designed for light manufacturing, assembly and small-scale production, making them popular among SMEs and startups. | • Relatively affordable entry price compared to other industrial segments • Wide tenant pool (e.g. SMEs, workshops, storage operators) • Easier for smaller investors to enter | • Strong competition due to abundant supply • Rental yields can be modest • Less suitable for heavy industrial activities | Investors looking for lower upfront capital exposure and stable rental returns |
| Designed for knowledge-based industries such as R&D, biotech, IT and back-office operations. | • Attractive to MNCs and tech firms • Tenants typically commit to longer leases • Modern landscaping enhances rental values
| • High capital required to purchase or develop • Vacancy risks if tenant demand shifts • Returns can by cyclical, tied to corporate strategies | HNW or institutional investors seeking prestige assets with long-term potential |
Warehouse and storage facilities | Used primarily for storage and distribution, especially for e-commerce, logistics and regional trade. | • Structural demand from e-commerce growth and supply chain needs • Tenants often sign multi-year contracts, providing stability | • Requires significant upfront investment • Demand is location sensitive • Vulnerable to global trade slowdowns | Those seeking exposure to long-term logistics growth |
Food Factories | Tailored for food processing, preparation and cold-chain storage. They face stricter regulations due to hygiene and safety requirements. | • Consistent demand from food operators • Can potentially command higher rents due to specialised fit outs • Supported by Singapore’s food security policies | • Narrower tenant base compared to general industrial • Higher compliance and operating costs • Vacancies can be harder to fill without specialised fit outs | Niche investors with knowledge or connections in the F&B sector |
Industrial Training Facilities | For training centres that use heavy machinery or industry-specific (shipbuilding, oil and gas or construction trades) equipment.
| • Stable demands tied to Singapore’s skilled labour ecosystem • May benefit from government support for workforce training
| • Tenant pool is specialised and relatively small • Repurposing options are limited | Those seeking long-term tenants in specialised education or training sectors
For eg. Shipyard training – where workers are trained in welding, marine engineering and ship repair |
Specialised Industrial Facilities (e.g. Data centres, Biotech labs) | Usually custom-built for large, single tenants.
For eg. AstraZeneca invested S$1.5 billion to build a manufacturing facility dedicated to producing antibody-drug conjugates. Facility is expected to commence operations in 2029. | • Strong demand for digitalisation, cloud computing and life sciences • Long-term leases with stable returns • High barriers to entry limit competition | • Extremely capital-extensive • Small pool of replacement tenants • Vacancy risks if anchor tenants exit | Large corporates and institutional players with deep pockets
|
Key considerations
When assessing which industrial property type to invest in, investors should weigh:
Location: Proximity to major transport infrastructure (Tuas Mega Port, Changi Airport, expressways) greatly affects tenant demand.
Tenant profile: Are you targeting SMEs, MNCs, logistics providers or niche industries? Larger, more stabilised tenants generally provide greater rental stability.
Lease tenure: Shorter leases mean depreciation over time and potential challenges with refinancing and resale.
Regulatory approvals: Some property uses require specific government agency’s consent, which can limit flexibility.
To sum up
Industrial property is far from a monolithic asset class. From affordable flatted factories to cutting-edge data centres, each type has a unique role to play in the economy and in an investor’s portfolio.
The right choice depends on your capital, investment horizon and risk appetite. For some, affordable flatted factories or logistic hubs may offer a balance of accessibility and demand. For others, business parks or specialised facilities could be the route to long-term growth.
By understanding the nuances of each industrial property type, investors can align their portfolios with Singapore’s evolving economy and make more confident decisions.
Once that foundation is in place, the next step is to explore financing, tax considerations and exit strategies, that is key to maximising returns.
