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B1 And B2 Industrial Property Use – Know What You Are Buying
A lot of new property investors are actually not aware that commercial and industrial properties are different in more ways than just a name.
The key difference is that commercial properties do not have an environmental impact on the area surrounding it’s location while industrial properties can cause disturbance to the surroundings.
Disturbance can be in the form of noise pollution, air pollution, safety hazards, etc. You cannot expect a manufacturing factory to be located in an office in Suntec City correct?
Industrial property is further classified under 2 groups. B1 light industry and B2 general industry.
If you ever have any doubts over the classification because your property agent is not convincing, always clarify with URA. This issue matters as you do not want to end up in a situation whereby your bought an industrial property fully expecting to rent to a specific type of tenant and finding out later that you cannot do so because of usage restrictions.
B1 are areas used or intended to be used for industry, warehouse, utilities and telecommunication uses for which the relevant authority (eg. NEA) does not impose a nuisance buffer greater than 50m.
B2 are areas used or intended to be used for industry, warehouse, utilities and telecommunication uses, whereby the business uses will be imposed with nuisance buffer more than 50m and within health and safety buffers. Special industries such as manufacture of industrial machinery, shipbuilding and repairing, may be allowed in selected areas subject to evaluation by the Competent Authority.
There were recent media reports on property agents advertising B1 and B2 industrial properties for office use. These are misleading information.
Industrial land is primarily safeguarded for industrial activities such as on-site manufacturing of goods, assembly and repair workshops, as well as warehouse and storage facilities.
The URA zones land to support industrial activities to ensure that limited industrial land is kept affordable for industries. Independent offices and shops are not considered industrial use and are not allowed within industrial developments. These activities should be carried out on land zoned for commercial use. – URA
To ensure that limited industrial land is used mainly for industrial uses, the URA requires at least 60% of the total floor area of an industrial development to be used for core industrial activities. However, URA recognises that certain non-industrial activities, such as ancillary offices, staff canteens and showrooms are needed to support the predominant industrial uses.
Hence, such supporting non-industrial uses, together with other ancillary areas (e.g. lift lobbies and circulation spaces) are allowed to occupy up to 40% of the total floor area of an industrial development. – URA
The full document describing B1 and B2 industrial properties can be found here.
Without due diligence, you could jolly well find yourself buying an industrial property with restricted use fully unaware of what you cannot do with it, As residential property prices are climbing like a squirrel up a durian tree, industrial properties have been targeted by property investors as an alternative. So before writing your cheque to buy one of those units in Paya Lebar or Tai Seng, do your homework to know what you are buying.
This article contains excepts from URA