5 reasons why investing in commercial property can be rewarding

5 reasons why investing in commercial property can be rewarding

If you have some extra cash and think of investing to get your money to work harder for you in this gloomy property market. Where can you invest now, in residential, commercial or industrial property? Residential property is on the downward trend, industrial property has a supply glut. Both residential and industrial property, government has implemented many curbs to slow down these markets. So which market is left, commercial property market?

5 reasons why investing in commercial property can be rewarding

1) First and most important of all is commercial property attract no extra taxes

Commercial property is not subjected to any additional buyer’s stamp duty (ABSD) or seller’s stamp duty (SSD). This will translate to ‘savings’ when you invest in commercial property instead of residential or industrial property which attracts ABSD and SSD.

2) Limited supply

Commercial property, be it shops or office space has limited supply of strata titled units for sale. For shops in shopping centres, one can only buy strata titled shops like Lucky Plaza, Far East Plaza, Orchard Towers, Sim Lim Square and People’s Park Centre to name a few. For offices in office buildings, one can buy strata titled offices like Octagon, International Plaza, The Central, GSH Plaza to name a few. Normally these prime office or shop units are owned by developers or REITS.

3) Holding its value

With limited land in Singapore, commercial property will be more limited than residential.  Singapore pushes for regional hub and headquarters for banks and service- oriented sectors will attract more companies to set up offices in Singapore. Plus the inability to add large amount of supply, will push prime office and shop units to be more and more valuable.

4) Affordability of commercial properties

Most commercial properties are owned by developer or REITS. But you don’t need to be a developer or REITS to be able to own commercial properties. There are still many strata titled office and shop units available for sale which is affordable to individual investor.

5) Prime commercial property has the upper hand

As owner of strata titled commercial property in prime area usually has the upper hand towards the tenant as supply of prime commercial property is limited. It will be easier to rent or sell these prime commercial properties with ease. With 5-6% yield you can easily pay the mortgage every month with the rentals.

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