Industrial real estate has become an increasingly popular investment option for those looking for steady income and long-term value. Whether you're new to this segment or looking to improve your current portfolio, understanding how to maximise return on investment (ROI) is essential.
From choosing the right location to managing tenants properly, every step matters. In this blog, we share simple and practical tips by Ang Chee Hian that can help you make better decisions and grow your returns over time.
Why Industrial Real Estate?
Industrial properties include warehouses, factories, and logistics facilities. In Singapore, this sector benefits from strong demand from e-commerce, logistics, food production, and manufacturing companies.
Compared to other property types, industrial spaces often offer:
- Longer lease terms
- Stable rental income
- Lower maintenance requirements
- Higher rental yields
However, to make the most of your investment, you need to go beyond just buying a unit and waiting for rent. The key lies in active planning and smart decision-making.
Tip 1: Choose the Right Location
Location is always important in real estate, and it’s especially true for industrial properties. Tenants look for easy access to expressways, ports, and other transport links. Being close to their clients or suppliers can also be a deciding factor.
In Singapore, areas like Tuas, Changi, and Jurong are popular due to their access to transport routes and industrial clusters.
Ask yourself:
- Is the location easy to access by trucks?
- Is it near major industrial zones or ports?
- Will the area continue to attract industrial demand in future?
Good location helps reduce vacancy periods and attract better-quality tenants.
Tip 2: Focus on Building Features
Tenants have specific needs. A unit with the right features can be rented out more easily and at a better rate. Some things to consider include:
- Floor loading capacity
- Ceiling height (especially for storage or racking systems)
- Number of loading bays
- Availability of parking
- Fire safety systems and approvals
Properties that meet operational needs will appeal to a wider range of businesses. Avoid buying a unit just because it looks good on paper. Always visit the property and understand how it fits the needs of potential tenants.
Tip 3: Understand the Lease Structure
A strong lease can directly affect your ROI. Industrial leases are often longer than residential ones, but the terms still vary.
Look out for:
- Length of lease (3 years or more is common)
- Rent escalation clauses
- Responsibility for repairs and maintenance
- Renewal options
It’s also helpful to review the tenant’s background. A reliable tenant can offer stable income for years, while a weak one can cause delays, defaults, or early termination.
Tip 4: Keep Costs Under Control
To get a clearer picture of ROI, it’s important to track all costs, not just the purchase price. These may include:
- Property tax
- Maintenance fees
- Repairs and upgrades
- Legal fees and stamp duties
Sometimes a lower-priced unit can end up costing more in upkeep. Make sure you factor in these hidden costs when comparing properties. Net returns are what matter most, not just gross rental income.
Tip 5: Monitor Market Trends
Industrial demand can shift based on trade conditions, logistics needs, and business cycles. For example, the rise in online shopping has created more demand for warehouses. At the same time, older buildings with outdated features may see lower interest.
Keep an eye on:
- New supply of industrial space in the area
- Government plans for zoning or redevelopment
- Industry trends like automation or cold storage demand
Being aware of these shifts can help you time your purchases, renew leases wisely, or even plan for property upgrades.
Tip 6: Maintain the Property Well
Well-maintained industrial properties attract better tenants and retain value over time. Even though industrial tenants often handle daily operations, the owner is usually responsible for structural issues, fire systems, and major repairs.
Schedule regular checks and make sure all systems are compliant with regulations. It’s also a good idea to respond quickly to tenant concerns. A good landlord-tenant relationship can help secure longer leases and better rent terms.
Tip 7: Plan with a Long-Term View
Industrial real estate is not about quick returns. The real value often comes from steady rental income over several years, followed by capital appreciation when you sell.
Avoid over-leveraging and plan your financing with some buffer for interest rate changes or vacancy periods. A patient, well-planned approach can offer much better results than chasing short-term profits.
Conclusion
Maximising ROI in industrial real estate isn’t about luck. It’s about making informed choices at every step, from buying the right unit to managing it well and planning for the future.
With proper research, good tenant relationships, and attention to detail, industrial properties in Singapore can become a strong and reliable part of your investment strategy.
According to Ang Chee Hian, successful industrial property investment is about knowing what tenants need, understanding market shifts, and picking the right properties with care. His approach focuses on building long-term income rather than chasing fast returns.
Looking to get started or refine your strategy? Reach out for expert guidance today.
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