Jermaine Koh
If you’ve only got a minute:
- Singapore’s push as a logistics and high-tech hub continues to drive demand for industrial spaces, from warehouses to business parks.
- Industrial properties may potentially offer higher yields and longer leases than residential assets, though they usually require a larger upfront outlay due to high costs (despite being exempted from ABSD).
- With the right financing and strategy in place, they can be a solid way to diversify your portfolio and capture growth in key industries.
Singapore has long been strengthening its position as a leading global hub for logistics, advanced manufacturing and high-tech industries, and is ranked the 3rd most attractive city for cross border investments in 2025. The cities ranked 1st and 2nd are Tokyo and Sydney.
Projects like Tuas Mega Port, the expansion of Changi Airport and the creation of innovation hubs like Jurong Innovation District and Punggol Digital District show how Singapore is building infrastructure and ecosystems these industries need.
According to DBS’s Property Market Research report, industrial space demand has been resilient particularly from logistics and new economy (AI and data) sectors and is the most preferred sector among investors. This steady demand for industrial spaces makes the sector an interesting option for investors.
This article explores why industrial property is worth considering, what to watch out for and the costs and considerations before diving in.
Why invest in Industrial Property in Singapore
Industrial property covers a range of spaces, from warehouses and logistics hubs to factories, business parks and data centres.
Unlike residential property, industrial real estate serves the needs of businesses, which means its performance is closely linked to trade activity, technology adoption and manufacturing trends.
DBS’s report showed that e-commerce and logistics led the demand in leasing, with warehouses being high in demand.
The number of industrial transactions has also consistently been higher than commercial transactions .
Here are 4 reasons why investors are increasingly drawn to industrial property.
1. Steady demand from key industriesE-commerce growth has created a consistent need for logistic hubs, while biomedical and semiconductor companies continue to seek specialised facilities. The expansion of data centres also reflects our country’s broader push towards digitalisation.
The report also found an increased demand in investment volume from the Johor-Singapore Special Economic Zone (JS-SEZ). We continue to attract sizeable investments from manufacturers. These trends help maintain stable occupancy and rental levels, providing a level of predictability that investors often value.
2. Support for growth industriesLong-term initiatives such as Jurong Innovation District and Punggol Digital District demonstrate government support for knowledge-intensive and high-tech sectors. By fostering innovation hubs and advanced manufacturing clusters, Singapore is indirectly boosting demands for corporate and industrial spaces in strategic locations – Jurong, Geylang and Bedok.
3. Competitive returnsCompared with residential real estate, commercial and industrial spaces generally provide higher rental yields. This is driven by steady demands from sector related tenants who tend to sign longer leases and are committed to corporate contracts.
For investors, this combination of stable tenants and attractive returns can make these assets an appealing alternative when compared with residential properties, which generally deliver more modest yields.
4. Diversification benefitsAdding industrial assets to a portfolio can help diversify risk because the spaces are leased to businesses rather than households. Hence, they are affected by different market dynamics than residential property, potentially offering balance when the housing market experiences fluctuations.
Types of Industrial Property
Industrial Property Type | Purpose |
|---|---|
Warehouses and logistics facilities | Essential for storage and distribution (for eg. Cold-chain warehouses for food and pharmaceuticals) |
Factories | For manufacturing and production activities (often split into light or heavy usage, depending on their setup and zoning – explained further in the B1/B2 framework below) |
Business parks | Tailored for high-value sectors such as technology and research. Combine office-like environments with industrial capabilities, with clusters like one-north and Changi Business Park) |
Specialised facilities | Includes purpose-built spaces such as date centres, biomedical labs and fintech hubs |
In addition to type, industrial properties are also zoned as either B1 or B2, depending on their permitted use:
Category | B1 (Light Industrial) | B2 (Heavy Industrial) |
|---|---|---|
Purpose | Clean, low-impact industrial activities (IT, R&D, electronics, software development and light assembly) | Heavier manufacturing, heavy machinery production and metalwork |
Environmental impact | Minimal noise and emissions | Higher noise and emissions allowed |
Typical locations | Nearer to residential/commercial zones within 50m noise buffer (NEA guideline) | Further away in industrial clusters like Tuas or Jurong NEA would require a 100m nuisance buffer from a B2 zone to the surrounding area |
Investor considerations | Broader tenant base, especially tech knowledge-driven firms | More specialised demand, but steady in traditional sectors (for eg. a logistics operator in Tuas or a shipbuilding company in Jurong may leave a B2 site for many years, which translate into stable leases for investors)
Fewer banks finance such properties under personal name, and may impact transaction liquidity if buyers are unable to secure a bank loan to purchase |
Pros and cons
Like any investment, industrial property comes with its strengths and trade-offs.
Pros | Cons |
|---|---|
Typically higher rental yields than residential | Tenure is usually shorter – many industrial properties are on 30- or 60-year leases |
Longer lease terms with corporate tenants, offering stable cash flow | Higher upfront costs due to larger spaces |
Potential to tap into growth areas like logistics, biomedical and tech | Cannot use CPF savings for downpayment |
No Additional Buyer’s Stamp Duty (ABSD) | Specialised infrastructure and features can drive up overall costs
|
Adds balance to property portfolio | While generally stable, industrial property markets can still be affected by economic downturns or shifts in industrial demand, posing a risk to returns |
Costs and fees
One-time, upfront expenses
- Downpayment: Loans typically finance up to 80% of the purchase price, leaving buyers to pay at least 20% upfront in cash.
- Buyer’s stamp duty (BSD): This is payable on all property purchases. Since February 2023, BSD rates for non-residential properties are 4% for values above S$1 million, and 5% for those above S$1.5 million.
Purchase price or market value of the property | BSD rates for non-residential properties |
|---|---|
First $180,000 | 1% |
Next $180,000 | 2% |
Next $640,000 | 3% |
Next $500,000 | 4% |
Next $1,500,000 | 5% |
Remaining amount |
- Seller’s Stamp Duty (SSD): A if resold within a short holding period.
Holding Period | BSD rates for non-residential properties |
|---|---|
Up to 1 year | 15% |
More than 1 year and up to 2 years | 10% |
More than 2 years and up to 3 years | 5% |
More than 3 years | - |
- Goods and Services Tax (GST): Industrial properties (sale and lease) incur 9% GST, payable in cash (not via CPF or mortgage). Under certain situations, if the purchase is made under a GST-registered company that holds the property, the GST may be refundable.
- Professional fees: Legal conveyancing ranges from S$2,000, depending on the property's value and the complexity of the deal.
Valuation reports required by lenders range between S$500 – S$1,000. Keep in mind larger and more complex properties may incur higher fees. When taking a bank loan, banks usually provide a cash subsidy to defray either part of or the entire sum payable for such fees.
Ongoing costs
- Property tax: All non-residential properties including commercial and industrial buildings are taxed at 10% of the Annual Value, which is based on the property’s estimated rental income. This excludes furniture furnishings and maintenance fees.
- Rental income tax: Any rent received from renting out your non-residential property is subject to income tax. Rental expenses incurred for producing rental income during the period of tenancy may be claimed as tax deduction. For simplicity, during tax filing, 15% of the gross rent would be deemed rental expenses and deductible among other allowable expenses such as interests paid on property loan, insurance premiums, and repair and maintenance fees etc.
- Insurance premiums: Fire, liability and business interruption coverage are common.
- Utilities and repairs: Routine repairs, security, power usage and equipment maintenance can accumulate quickly, especially for larger facilities with heavy machinery.
Financing Industrial Property loans
DBS Consumer Banking Group offers loans for both completed and under-construction industrial units, financing up to 80% of the property value under personal name. Loan tenures range from 1 to 25 years, with options for fixed or floating interest rates, offering flexibility to structure repayments according to your cash flow and strategy. We also offer useful features such as waiver of early prepayment fee due to property sale for certain loan packages. Such features maximise your choice of potential financing solutions.
Find out more: DBS Industrial and Commercial Property Loan
Key considerations
Lease tenure | Remaining lease years affect financing, tenant demand and resale value |
Zoning | Ensure usage matches tenant needs |
Financing | Higher upfront capital is required (CPF usage not allowed) |
Location | Accessibility to ports, airports and business hubs can impact occupancy and rental stability |
Exit strategy | Industrial assets can be less liquid. Decide upfront if your goal is income, growth or eventual sale. |
Final thoughts
In short, industrial real estate offers investors an avenue to diversify portfolios with assets backed by resilient demand, as long as factors like tenure, costs and financing are carefully considered.
