How Many Industrial Properties Can You Own in Singapore? A Guide for Investors

For investors looking to expand their portfolios, Singapore’s industrial property market offers exciting opportunities for growth and passive income. But if you’re wondering, “How many industrial properties can I buy in Singapore?,” the answer isn’t always straightforward. With regulations, financing considerations, and strategic planning playing critical roles, it’s essential to understand the nuances of acquiring multiple industrial properties.

In this guide, we’ll explore the regulations surrounding industrial property ownership, financing options, and how to strategically build a portfolio that maximizes returns in Singapore's thriving industrial real estate market.

Is There a Limit to How Many Industrial Properties You Can Own?

Good news for investors: there is no explicit limit on the number of industrial properties you can own in Singapore. Unlike residential properties, which are subject to measures such as the Additional Buyer’s Stamp Duty (ABSD), industrial properties have fewer restrictions in terms of ownership.

However, there are some important considerations you should keep in mind:

1. Financing Limitations

While there is no cap on the number of industrial units you can own, securing financing for multiple properties can become challenging. The Total Debt Servicing Ratio (TDSR) applies to all properties, including industrial ones. This means that your total monthly repayments on loans should not exceed 55% of your monthly income, making it harder to finance multiple properties unless you have substantial capital or passive income streams.

Tip: If you’re planning to purchase multiple industrial properties, ensure your financial standing allows for flexibility. Many investors use the rental income from their current industrial units to finance new acquisitions.

2. Property Zoning and Usage

While the number of industrial properties isn’t restricted, you must ensure that the properties you purchase are zoned appropriately for your intended business or tenant use. Industrial properties in Singapore are classified into Business 1 (B1), Business 2 (B2), and Business Parks. Some property uses may be restricted based on zoning laws, so always check the Urban Redevelopment Authority (URA) guidelines.

3. Leasehold vs. Freehold Properties

Most industrial properties in Singapore are leasehold, with common lease terms ranging from 30 to 60 years. It’s crucial to assess the tenure of the properties you buy. Properties with shorter leases may be more affordable but could limit long-term capital appreciation.

Additionally, you can own multiple leasehold properties, but always consider the number of remaining years on the lease, as shorter tenures can affect your financing options and future resale value.

Building a Portfolio: 4 Reasons Why Investors Buy Multiple Industrial Properties

Acquiring more than one industrial property can offer several benefits to investors, from diversifying risk to increasing potential passive income. Here’s why owning multiple industrial units might be a strategic decision:

1. Diversifying Income Streams

Owning multiple industrial properties allows you to generate income from different sources. For example, one of your properties could be leased out as a factory for rent in Singapore, while another could be used for logistics or warehousing. This diversification helps mitigate risks associated with changes in industry demand or market conditions.

2. Maximizing Rental Yields

Industrial properties typically offer higher rental yields than residential properties, making them attractive for investors looking for passive income. By purchasing multiple properties, you can increase your overall rental income and build a portfolio that supports your financial goals.

3. Leveraging Property Appreciation

Over time, well-located industrial properties tend to appreciate in value. If you purchase properties in high-demand areas such as Jurong or Tuas, you may see significant gains in both capital appreciation and rental income. By owning more than one property, you multiply your chances of benefiting from long-term price increases.

4. Economies of Scale

If you're managing multiple industrial spaces, you may benefit from economies of scale. For example, maintenance costs, property management fees, and operational expenses can be optimized across your portfolio, lowering your per-property costs.

Financing Multiple Industrial Properties

As mentioned earlier, financing plays a significant role in how many industrial properties you can realistically own. Here are a few key things to consider when financing multiple properties:

1. Loan-to-Value (LTV) Ratios

Industrial properties generally have a lower loan-to-value ratio than residential properties. Most banks in Singapore will offer an LTV of around 70% for industrial property purchases, meaning you’ll need to come up with at least 30% of the property’s value as a down payment. If you plan to buy multiple properties, you must ensure you have enough capital to cover these upfront costs.

2. Using Rental Income for Financing

If you’re already generating rental income from one or more industrial properties, you can use this income to offset the costs of additional property purchases. Many investors take out loans based on their existing rental income streams, enabling them to expand their portfolio without taking on excessive personal debt.

3. Leveraging Commercial and Business Loans

Unlike residential properties, industrial units often qualify for commercial loans or business loans. These types of loans may offer higher LTV ratios and more flexible repayment terms, especially if you have a strong track record of generating income from your properties.

4. Consider Shorter Loan Tenures

Because many industrial properties in Singapore are leasehold, financing institutions may offer shorter loan tenures, especially for properties with limited lease periods remaining. Always be prepared for higher monthly repayments if the loan tenure is shorter than expected.

Conclusion: Choosing the Right Strategy for Industrial Property Investment

When deciding how many industrial properties to buy, it’s essential to evaluate your investment goals, financial capacity, and market conditions. With the right strategy, industrial properties can be a highly profitable asset class, generating passive income and long-term capital appreciation. However, purchasing the wrong type or location of property can lead to financial challenges, especially if you don’t adequately assess factors like lease tenure, rental demand, and financing.

If you’re interested in expanding your portfolio or are new to the Singapore industrial property market, it’s important to get the right advice. Contact us for a one-on-one, no-obligation consultation with our team of industrial property experts, and we’ll help you chart the best path forward for your investment journey.

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