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Freehold Industrial Properties. A Rare Species These Days.

Freehold Industrial Properties. A Rare Species These Days.

If you were to have a closer look at the historical data on industrial government land sales from 2005 to 2019, you would notice that the tenure are mostly in the range of around 30 years and below but not freehold.

While freehold industrial land may be scarce in Singapore, it may not always be a bad thing to own a leasehold industrial property.

While the thought of owning a development where the lease or tenure will not expire may sound like a perfect investment to pour your resources in, it may not necessarily be true.

In terms of mortgage and monthly installments or repayments, a 20 or 30 leasehold industrial space is likely to be kept lower and more affordable but of course it would still depend on the entry or purchase price of the industrial property.

Even if you were to own a freehold industrial development, most banks would usually only loan you for a tenure of up to 30 years and you may find that the monthly repayment amount can be quite substantial. Sometimes, the amount of monthly installments can even be more than if you were to be a tenant and rent the industrial factory or warehouse from a landlord.

Although it may sound like a good idea to have assets under the company’s name, some companies would rather use the funds to re-invest, improve or take the business to the next level.

This may also explain is why some businesses still prefer leasehold over freehold. Freehold industrial properties, are sometimes preferred by business owners who have plans to pass down the business and its assets to future generations as freehold properties tend to maintain its value even as these properties age over the years.

For freehold industrial property lovers, there may still be some newly launched developments where the site was purchased through an en-bloc sale but not through industrial government land sales.