Land tenure simply refers to the lease duration of the land. As investors, we want to make sure that our investment properties have longer land tenure so that banks are able to give us the maximum loan tenure.
In the current Singapore market, the longest land tenure for new industrial properties is 30 years. The banks will determine the loan tenure for the borrower by taking the remaining lease of the property tenure, minus 5 years. This means that buying an industrial property with a remaining lease of 20 years will only get you a maximum loan tenure of 15 years.
A shorter loan tenure will translate to a higher monthly mortgage payment as compared to buying another similar property with a longer lease remaining. Investors should aim for a longer loan tenure to lower the monthly mortgage payment so that positive cashflow can be achieved.
Types of Land Tenures
There are 2 types of land tenures:
- Leasehold. Leasehold land tenure has a fixed number of years, e.g. 999 years, 99 years. The original owner, usually the State, has a reversionary interest at the end of the lease period. This means that the land will revert to the original owner without any compensation.
Private property homeowners may choose to collectively top up the lease before it hits zero, by paying the Differential Premium which is subjected to approval. Otherwise, a more common approach is to opt for an en-bloc sale (collective sale).
- Freehold. The more common freehold land tenures are “Estate in Fee Simple” and “Estate in Perpetuity”, where the landowners own the plot of land indefinitely. The only difference is that “Estate in Perpetuity” is subject to the terms under the State Lands Act, which is sometimes referred to as Statutory Land Grant (SLG).
The last type of freehold tenure which is also the rarest, is “Life Estate”, where the land is only owned during the person’s lifetime.
The relationship between Leasehold and Freehold can be witnessed in the Bala’s Table from SLA. It measures the leasehold value of the land as a percentage of its freehold value. The graph a downward sloping curve, which is steeper towards the end. This means that as the remaining tenure gets shorter, the land value will drop exponentially. This explains why older leasehold properties are difficult to appreciate in value.

2 Ways of calculating Loan Tenure for industrial property
- Remaining land tenure minus 5 years or
- 70 minus age of the borrower, whichever is lower
Example 1:
Land Tenure: 30 years
30 years – 5 years = 25 years loan tenure
Example 2:
Land Tenure 50 years: 50 years – 5 years = 45 years
Through this calculation, the loan tenure is technically 45 years but there is a cap of 30 years loan tenure that was introduced by the banks. This means that the maximum loan tenure you can get is 30 years.
New launches vs Resale (Industrial)
Since 2012, new industrial properties were launched with land tenures in the range of 20 to 30 years. In contrast, most of the existing industrial properties have remaining land tenures of 40 to 50 years. Using the new land prices as the benchmark, we are able to ascertain the price differences for the existing industrial properties which presents an opportunity for gains.

What’s the recommended Land Tenure for Industrial Properties?
Our golden number for land tenure is more than 33 years, which is one of our 5 criteria to select a good industrial property. The reason for 33 years is to avoid paying the Seller Stamp Duty (SSD), where sellers will be taxed if the property was sold within 3 years from the purchase date. If the holding period is less than a year, the stamp duty will be 12% and this is calculated based on your selling price and not your profits. This suggests a minimum holding period of 3 years. Otherwise, the profits gained may potentially be wiped out by the SSD.
Referring back to the land tenure of 33 years, a 3-year holding period will mean that the next buyer would still be able to purchase the property with a remaining land tenure of 30 years. As such, banks would then assess the loan tenure as 30 years – 5, which turns out to be 25 years for the next buyer.
What about Freehold Industrial Properties? (Industrial)
Freehold properties generally have a higher price Per Square Foot (PSF), as there are limited freehold properties in the market. However, paying for a higher PSF does necessarily translate to collecting a higher rental for industrial properties. This is because the status of the land tenure is not within the tenant’s consideration when choosing a property to rent. Hence, paying a higher PSF on freehold properties may result in a negative cash flow situation which is not the most ideal for investors.
Conclusion:
Land tenure is one of the key considerations when investing in industrial properties. Although older industrial buildings have higher PSFs as compared to new industrial launches, they have much longer land tenure. After factoring in the depreciation of the building, investors will still achieve good returns from the property even in the worst case scenario over the long run.