Industrial property can cover mortgage with rental, but it depends heavily on the sector, location, and entry price. In Singapore, some industrial segments tend to have more stable tenants and better cashflow potential:
1) Warehouses and Logistics Facilities (B2)
• Tenants: logistics companies, e-commerce fulfilment, distributors.
• Pros: Longer leases (3–5 years common), stable demand, less sensitive to consumer spending.
• Downside: Higher quantum and often lower yield compared to older factories.
2) Food Factories / Central Kitchens
• Tenants: F&B operators, cloud kitchens, food manufacturers.
• Pros: Sticky tenants (relocation cost is high), strong demand post-COVID.
• Downside: Maintenance issues, grease traps, higher wear and tear.
3) Data Centres / High-Spec Industrial
• Tenants: tech firms, cloud providers.
• Pros: Very stable, institutional-grade tenants.
• Downside: Extremely high entry price, yields are usually lower.
4) Ramp-Up Factories in Mature Industrial Estates
• Areas: Tai Seng, Kaki Bukit, Ubi, Woodlands, Jurong.
• Pros: SMEs, light manufacturing, workshops. Often better yields (4–7% gross).
• Downside: Tenant turnover risk during economic downturns.
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Reality check on “rent covers mortgage”:
• Industrial yields in SG typically range 3.5% to 7% gross depending on age and location.
• After interest, property tax, agent fees, vacancy, and maintenance, net yield is often 2–5%.
• Full mortgage coverage usually happens when:
• You bought below market value
• You put higher downpayment
• Interest rates are low
• Tenant signs long lease with escalation clause
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If your goal is pure cashflow:
Older B2 factories and ramp-up units in secondary locations tend to have the best chance to cover mortgage.
Prime new industrial projects are safer but rarely cashflow positive.
If you want, share your budget and loan profile. I can tell you realistically which type of industrial property in SG can be structured to be cashflow neutral or positive.
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