Understanding 30-Year Leasehold Industrial Properties: Are They Worth It?

Introduction With the government releasing more 30-year leasehold industrial sites, investors are asking: are shorter tenures worth it? Here's what you need to know about 30-year leasehold industrial properties in Singapore.

Why the Shorter Lease? Shorter leases allow land to be recycled more efficiently. These properties often cater to specific business needs (e.g., food production, clean tech) and are usually priced more affordably per sq ft than longer-tenure options.

Pros of 30-Year Leaseholds

• Lower Upfront Cost: Cheaper to acquire compared to 60-year or freehold properties.

• Faster Depreciation = Higher Yield: Because of their lower cost and strong rental potential, yields can be attractive in the short to medium term.

• Suits Operational Owners: Great for businesses who plan to occupy the space and can recover costs over a shorter horizon.

  
  

Cons to Watch Out For

• Financing Limitations: Banks may offer lower Loan-to-Value (LTV) and shorter loan tenure, affecting cash flow.

• Resale Market Shrinks with Time: As lease tenure shortens, buyer interest may drop.

• No Redevelopment Potential: Unlike longer-lease or freehold sites, these have limited upside potential.

  
  

Investment Strategy Focus on rental income rather than capital appreciation. Always calculate breakeven costs and understand your exit timeline.

Conclusion 30-year leasehold industrial properties aren’t for everyone, but they serve a niche group of investors and business owners well. With clear understanding and exit planning, they can be a strategic asset.