Freehold vs Leasehold Industrial Units: Which Offers Better ROI?

When it comes to investing in industrial properties in Singapore, one of the biggest considerations is freehold vs leasehold. Each offers unique advantages—and depending on your investment horizon, capital, and exit strategy, one may suit you better than the other.

Understanding the Basics

• Freehold Industrial PropertiesThese are rare gems in Singapore's tightly held industrial market. Freehold units offer perpetual ownership, potentially giving investors long-term capital appreciation and freedom from lease decay concerns. However, they typically command higher upfront prices and are often located in less central zones.

• Leasehold Industrial PropertiesMost industrial units in Singapore come with 20, 30, or 60-year leases, particularly those under JTC. Leasehold properties are more affordable, making them attractive to SMEs and investors seeking higher short-to-mid-term yields. But as the lease shortens, the property's resale value and financing options become increasingly limited.

  
  

So, Which Offers Better ROI?

It depends on your investment goals:

• Short-to-Mid-Term Investors may find leasehold units more lucrative due to lower entry costs and potentially higher rental yield.

• Long-Term Holders who prioritise asset preservation and capital growth may benefit from owning freehold properties despite a lower initial yield.

  
  

Here’s a quick comparison:

Factor	Freehold	Leasehold (20–60 yrs)
Ownership Duration	Perpetual	Fixed (decaying value over time)
Capital Outlay	Higher	Lower
Rental Yield	Moderate	Higher (initially)
Resale Flexibility	Strong	Dependent on remaining lease
Loan Tenure & Value	Longer & higher valuation	Reduced with lease decay

Decision Considerations

Before choosing, assess your cash flow needs, exit timeline, and tenant demand in your chosen industrial zone. If you're buying into a leasehold with under 30 years remaining, be cautious—financing may be limited, and resale may require a buyer with strong cash.

Whether you're just starting out or scaling your industrial property portfolio, it pays to stay informed.

#Singapore #IndustrialProperties #sgindustrialgroup

🔍 For more tips, listings, and insights on, visit www.sgindustrialgroup.com