Important Factors to Consider During a Commercial Property Purchase

The commercial real estate scenario of Singapore is going through a very exciting phase for any property investor in the city. Investors will be able to find a world of opportunities in this real estate industry. Moreover, the commercial segment of the real estate industry of the city also allows the owners to enjoy tax exemptions from the Additional Buyer’s Stamp Duty (ABSD), the Seller’s Stamp Duty (SSD) and the many regulations that apply to foreigner ownership. This can help to save a lot of money, which in turn, impacts the eventual profit figures in the long run.

When investing on commercial properties in the city of Singapore, there are two primary ways that investors can go about with their endeavour. They can either make the investment alone as an individual, or they can form a corporation and make the investment as a Private Limited or as a Limited Liability Partnership (LLP). In either of these procedures, there are a number of key areas that investors need to pay careful attention to. Some of these have been mentioned below.

In case the investment is being by an individual, it is important to note that the use of the Central Provident Fund or the savings made through an Ordinary Account is prohibited for making the down-payment. Hence, the down-payment for investments on commercial properties like the Tai Seng Point will have to be made in the form of cash deposits. Hence, investors need to have the cash ready before they plan on making such investments in the city. Moreover, additional cash payments might have to be made in case the property is unable to generate adequate returns for the timely loan repayments.

Hence, investors have to ensure immediate returns or save enough money in the bank to accommodate time repayments.

The property tax applicable for all commercial properties in the city amounts to a flat 10% of the value of the property at the end of every year. Regardless of whether the commercial property has been leased out or occupied, the tax is applicable to all commercial properties in the city. Owners of vacant properties can, however, apply for a tax refund on the basis of their property being vacant. Such refunds and redemptions are not only applicable to the commercial properties, but it also applies to residential properties in the city.

Prior to making an investment on commercial properties like the Tai Seng Point Singapore, it is important to study and understand the various opportunities of rental yield and capital generation. Commercial properties generally tend to have a much higher rental value than residential properties, but at the same time, they also have higher maintenance expenses. All of these costs need to be included in the calculation when trying to figure out the annual capital yield of a residential property in Singapore. These factors will ensure a profitable investment, and reduce the chances of loss by a great margin.