5 Good Reasons to Invest in Commercial Properties As an investor, you are most likely aware that beyond the investment of residential properties, commercial properties up for grabs too. However, there is a common misconception that commercial properties are highly expensive and thus the reason they aren’t as popular as residential ones. Today, I’m going to dispel that myth and inform you about the benefits of such an investment. Check Here 5 Good Reasons to Invest in Commercial Properties.
1. Foreigners Eligibility
A common frustration among foreigners is the fact that foreigners are not eligible to purchase landed properties, therefore cutting them off from some of the most profitable opportunities out there.
With commercial properties, however, there are no restrictions on what you can purchase, including:
- Commercial shophouses
- Industrial properties
- Hotels registered under the provisions of the Hotels Act)
2. The Affordability of Strata-titled Properties
When you only buy a single unit in a commercial property, it is known as a strata-titled property, and it is much more affordable than purchasing the entire building. You own the unit, but you share the common areas with others while someone else would maintain the whole building. This kind of purchase will significantly reduce the costs of the investment while still retaining a consistent amount of returns.
3. No ABSD
The ABSD (Additional Buyer’s Stamp Duty) has been the bane of many investors when buying additional residential properties, a tax rate that charges at 20% of the purchased property worth. Furthermore, PRs will have to pay 5% ABSD just for their first purchase alone.
With commercial properties, however, the price tag isn’t attached to such obligations. One possible reason for this is due to the more significant potential for overheating in the residential market compared to the commercial one, and the government, therefore, doesn’t see the necessity for such a cooling measure.
4. No SSD
In addition to the ABSD, property owners are also subjected to the SSD (Seller’s Stamp Duty) fee as well when selling their properties within 3 years of the purchase. The rates are as follows:
Selling a property within 1 year: 12% of property worth
After 1-2 years: 8%
After 2-3 years: 4%
After more than 3 years: No SSD
For commercial properties, however, there exist no such obligations either, and investors possess greater freedom in selling away their properties whenever they wish.
5. A Rare Heritage for Singapore
Due to our increasingly progressive society today, the cultural landmarks of yesteryear have been quickly replaced with modern structures. While having better facilities, these newer amenities lack the same character and dramatic flair of shophouses and hotels bearing traditional architectural designs. These buildings are not only significant cultural icons for the country but also very profitable assets due to their rarity in numbers. With each purchase, the supply decreases in its amount; the demand and market-rate would, therefore, fluctuate to great heights too.
With these benefits, the commercial property market provides a profitable business opportunity not just for foreign investors, but our local companies too.
Look out for our other articles as we share other important information on buying landed properties here in Singapore.
