Why freehold food factories are strategic and stable investment assets

Freehold food factories are extremely rare in the market. This niche market segment offers an untapped and attractive yield investment opportunity that most investors have overlooked.

Unlike standard 30-year or 60-year leasehold industrial properties, freehold food factories give long-term investors perpetual value. As a freehold property, this asset class is immune to lease decay and can be a highly defensive asset in periods of volatility. Owners can pass down the asset across generations, preserving their wealth and capital investment.

The asset’s resilience lies in its limited supply. Authorities seldom issue new land parcels because sites zoned for food production are tightly regulated. Food factories are subjected to strict environmental guidelines, and their specialised infrastructure is costly and difficult to construct, making them highly scarce and sought after.

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Besides rarity, Singapore’s strong fundamentals in food manufacturing and delivery services continue to prop up demand for food factories. Demand increased after national food security goals scaled up centralised food production needs.

Evolving food industry

Singapore’s F&B industry has evolved over the past decade due to changing consumer behaviours and new government initiatives.

Demand for food delivery services and ready-to-eat meals rose exponentially after the pandemic. This caused the number of end-user food establishments and central kitchen operators to spike in tandem. In 2025, both non-retail food establishments and food shops expanded to their highest levels since data was available from 1993.

According to the Department of Statistics Singapore, the number of non-retail food establishments jumped by 64.8% from 1,618 units in 2015 to 2,667 units in 2025 — above the past 16-year average of 1,862 units.

Food shops similarly expanded by 47.7%, from 16,490 units to 24,359 units over the same period — much higher than the past 16-year average of 18,634 units.

End-user food establishments and central kitchen operators have been the primary occupiers of food factory spaces, serving the local F&B market. Their business model, which focuses on centralised food production, improves efficiency, as occupiers have better control of food quality and more seamless distribution islandwide. There may be lower tenant turnover, which can provide longer-term security and higher investment returns.

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Government initiatives propel growth

The government has recently updated its food strategy by replacing the 30 by 30 food sustainability goal with new targets for fibre and protein. It aims to supply 20% of local fibre consumption and 30% of local protein consumption by 2035.

With these changes, we have already seen new start-ups producing more laboratory-grown meat and plant-based protein products. Many are setting up production lines and factories here.

The refreshed food resilience strategy could see more industrial spaces catered for domestic F&B outlets, central kitchens and food technology operations.

Growing preference for freehold food factories

The depreciation of existing leasehold food factories is making a strong case for owners considering freehold options. Many leasehold food factories are already midway through or approaching the end of their tenures. Investors and occupiers must either absorb the high extension costs or face disruptive relocations.

In Singapore, most industrial land sites are leasehold, and they are usually sold through the Industrial Government Land Sales Programme. Freehold land sites are less common as they can be acquired only through tedious private negotiations or collective sales.

While it may be easier to acquire leasehold sites, food factories with a leasehold tenure face lease decay given their relatively shorter lease, which typically lasts for either 30 or 60 years, resulting in a low terminal value towards the end of their lease period.

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Freehold food factories, on the other hand, offer the ultimate long-term value proposition as they provide long-term operational growth and security. Occupiers do not need to fear losing their tenanted space or incurring major reallocation costs when the lease expires.

This is important for capital-intensive central kitchen operators where fit-out sunk costs tend to be high. Investors can also be assured of resilient tenant demand and a steady stream of recurrent income.

Price premium and stable rents

Freehold food factories have consistently been sold at a much higher price premium when compared to their leasehold counterparts. This reflects investors’ willingness to pay for assets with perpetual tenure.

Data from the JTC Corp shows that median prices of leasehold food factories transacted at around the $600 psf price range in 2Q2026, whereas freehold food factories were sold at around $1,500 psf. Some of the recent freehold food factory transactions were recorded at Citrine Foodland @ 33 Kim Chuan and CT FoodNex.

As for the rental market, the general multiple-user factory segment has been resilient. JTC data shows an upward trend in median rents of multiple-use factories from 1Q2018 to 2Q2026 across planning areas where food factories are located.

Of these locations, Tuas registered the strongest rental growth of 83.3%, followed by Sembawang at 79.2% and Hougang at 53.3%. The positive rental trends were observed for several freehold food factories in Sungei Kadut, where average rents rose by 52.2%.

Comparatively, Clementi saw a smaller gain of 14.3%, while Toa Payoh had a 10.4% increase.

Of the planning areas, Toa Payoh had the highest leasing demand of 251 leases, followed by Clementi (226 leases), Sembawang (216 leases) and Sungei Kadut (123 leases).

Mandai and Tuas are choice locations

Many operators have been occupying food factory spaces in Mandai and Woodlands, where operational spaces are larger and costs are lower than for retail spaces.

Food factories in these locations are set to benefit further from the Sungei Kadut Eco-District master plan transformation. An agri-food ecosystem that will complement the neighbouring Senoko food zone and Lim Chu Kang farms is being set up to support food demand and supply needs.

Food manufacturers and related technology firms will be drawn to the area, creating a larger pool of tenants seeking food factories. Investors will enjoy greater rental demand in the long run and higher investment value if they were to buy a new food factory there.

Food Vision is one of the newest completions

There are few freehold food factories in the market. Food Vision @ Mandai is one of the newest freehold food factories to be completed. Jointly developed by Sim Lian Development and EL Development, the 10-storey freehold ramp-up B2 food factory features 114 production units and one staff canteen.

The newly completed project will offer new spaces for food production and central kitchen operations. Its location within the established Mandai food manufacturing cluster allows businesses to benefit from close proximity to suppliers and distributors, enhancing operational efficiency and logistics connectivity across Singapore.

Long-lasting value

In a market where asset values depreciate over time, freehold food factories will continue to offer a compelling proposition to investors. The value preservation helps position investors and F&B players for attractive long-term returns while occupiers benefit from the security of perpetual ownership.

As Singapore continues to anchor its position as a regional food innovation and R&D hub, demand for premium and highly regulated industrial spaces is expected to grow further over the next few decades.