How to Analyse Rental Yield for B2 Industrial Properties

sgindustrialreales
Jul 29
2 min read

Investing in B2 industrial properties in Singapore can be a smart move for those looking to generate steady passive income. But how do you know if a unit is actually worth the price tag? The answer lies in calculating and understanding rental yield—a key metric every investor should master.

What is Rental Yield?

Rental yield measures the annual income generated from a property as a percentage of its purchase price. It helps investors assess whether the property generates sufficient returns to justify its cost.

Formula:

Gross Rental Yield (%) = (Annual Rental Income ÷ Property Purchase Price) × 100

For example:If your B2 unit costs $1,000,000 and rents out at $4,500/month,your annual rental income is $54,000,and your gross rental yield is 5.4%.

What's a Good Yield for B2 Properties?

4%–5%: Typical for well-located, newer units
5.5%–7%: Possible for older units, units with shorter leases, or in fringe areas
Above 7%: High-risk/high-return units, possibly with maintenance or vacancy issues

Factors Affecting Rental Yield

Remaining Lease Tenure – A shorter lease usually lowers the property price, which may increase the yield, but also comes with resale risk.
Location & Accessibility – Proximity to highways, MRT, and major suppliers boosts rental demand.
Unit Size & Configuration – Tenants often prefer flexible layouts and efficient space usage.
Maintenance & Property Charges – High costs will eat into your net yield.
Vacancy Rates – Frequent tenant turnover reduces effective yield.

Net vs Gross Yield

To get a true picture, also calculate net yield, which accounts for maintenance, taxes, agent commissions, and other operating costs:

Net Rental Yield (%) = [(Annual Rental Income – Annual Expenses) ÷ Property Price] × 100

Final Word

Rental yield is one of the most useful tools to quickly compare investment properties. But remember, yield is only one part of the equation—exit strategy, capital gains, and tenant profile also matter.

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