Is investing in Singapore Commercial or Industrial Property a good idea

Is investing in Singapore Commercial or Industrial Property a good idea – Singapore is a great place to invest in property.

There are many reasons for that but the key few reasons we usually look into is this:

  1. Financing is cheap because of its abundance
  2. Laws are strict on property owning and it protects property owners very well
  3. Rental market is strong in Singapore
  4. Singapore is small in land size and therefore real estate is likely to only gain in prices over time
  5. Singapore has a strong currency that holds its position as one of the top choice of currencies to hold

Because of the above few reasons, we have seen a general growth in demand for Singapore property.

This has helped Singapore to gain much in terms of property pricing over the past two decades.

But over the past couple of years, due to the strong growth of prices, the Singapore government has decided to slow things down a little to prevent a potential bubble.

Bubbles can cause major social unrest and this is something that the government do not wish to see in Singapore.

Cooling measures such as were slowly introduced:

  1. Additional Buyers Stamp Duty
  2. Seller Stamp Duty
  3. Total Debt Servicing Ratio

With such taxes in place, the heated market has seen a slower pace of growth as before.

So with the residential market hit by such measures, the question comes “Is investing in Singapore Commercial or Industrial Property a good idea?”


Let us explore with a few items to think of:

1. Commercial & Industrial property correlate to the Singapore economic growth

As commercial and industrial property are either bought and rented by business carrying out either retail business or industrial business, the demand is likely to be strong.

Reason being, Singapore is a strong economy with strong growth and good governance.

With the Covid-19 pandemic likely to go into endemic phase and the government intending to open up borders to those that have been vaccinated, it is likely that Singapore will experience a much faster growth in the next few years because of the slow down over the 1.5 – 2 years of Covid-19 pandemic phase.

As economic activity builds up, commercial property and industrial property demands are likely to climb and with it the investment potential of owning such properties right now.

 

2. NO additional buyers stamp duty for non-residential properties

Residential properties are what many people look at and understand but not many people understand commercial and residential properties.

But if you do look into them, one key strength of purchasing this properties  is that there is no ABSD if you want to own more.

You can also let go as and when you want to because there are not much taxes.

This is great because of the relative liquidity involved.

3. Interest rates are as low as residential property interest rates

We all know that interest rates when buying a property is something that needs to be factored in if this is an investment property.

At the current rates of 1.38% for some banks, the interest rates for such properties are as low as that of residential properties.

This gives rise to the competitiveness of owning industrial or commercial properties in Singapore.

Rates are likely to stay low for a short while more before the economy starts to recover and build up and globally as interest rates go up, Singapore is likely to follow suit.

4. You can own multiple properties under your own name or your company

Residential properties and all its taxes means that you can likely only own one or two and it will not be economical to own more.

You either have to place it under relatives names or have a complicated structure such as a Trust.

But with commercial and industrial property, this is not necessary.

You can setup a Pte Ltd Company and own all this properties under it, you can even deduct cost from interest expenses and management expenses.

 

5. Rental Returns are quite competitive

Depending on which location and also the type of property you purchased, you might be able to get anywhere between 3-5% rental returns.

This is something that is quite in line with what residential properties in Singapore are giving you.

For investors, this is also something that you should take note of, minus off the taxes and getting similar returns sounds like a good idea.


Conclusion:

Buying a industrial or a commercial property in Singapore is likely a good idea for the next 5 years at least as we expect strong growth and likelihood of cooling measures still being around holding down the residential market.

We also believe that as the younger generation of Singaporeans become more educated in investment options, they may be more keen to buy than to rent as opposed to older generation business owners or investors.


avant mortgage

Avant Mortgage is a Singapore based Mortgage Loan Brokering firm assisting clients to get their best rates in home loan and commercial property loans.

We are able to guide you through which packages are the best for your purchases and investments.

Contact us to find out how we can help you to save on interest and at the same time enjoy the best benefits of working with a Mortgage Loan Broker.

Is investing in Singapore Commercial or Industrial Property a good idea